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Funding the pursuit of a negligence claim

Insurance funding and ‘third party funders’

The last decade or so has seen a rapid growth in the variety and the availability of insurance policies designed to fund or facilitate legal advice. Without necessarily knowing it, many homeowners have legal expense insurance as standard within their home building/contents insurance. Other products also often carry legal expenses insurance such as trade union membership, club memberships and credit cards.

Where clients do have the benefit of insurance, a key issue that often arises is the ability to have the solicitor or lawyer of the client‘s choosing. Insurance companies normally try to force their insured customers to use a ‘panel’ solicitor recommended by the insurance company and on their panel. That arrangement can often leave the client feeling that their lawyer is looking after the interests of the insurance company more so than their own interest.

European legislation requires that in most cases clients have the right to choose their own lawyer rather than accept the insurance company‘s panel lawyer. Unfortunately, this right is rarely explained to clients. Even when clients try to insist upon choosing their own lawyer, they can be met with resistance. It is sensible for clients to involve the lawyer of their choosing to assist in ensuring the insurance company allow them to appoint their own lawyer.

Aside from the availability of insurance products to help facilitate legal assistance, there are also an increasing number of ‘third party funders’ who are willing to assist in funding legal claims. In summary, these funders are private individuals or entities who can facilitate legal advice and representation in return for a share of the winnings.