Insurance Companies Cannot Compel Claimants to Use their Panel Solicitors

In an important victory for employees the European Court of Justice has held that a legal expense insurer cannot insist that the insured use its panel lawyers. In the case of Sneller -v- DAS, an important case strengthening an employee’s position in dealing with insurers the Claimant held legal insurance with DAS. The insurance contract stated that the insured had the freedom to choose their own lawyer if DAS decided that the case should be dealt with by external lawyers (rather than its own staff). The Claimant wished to bring a claim of unfair dismissal instructing his own lawyer, but DAS preferred to keep it inhouse.

The CJEU considered Article 4(1) of Directive 87/344/EC on legal expense insurance, which recognises an insured person’s freedom of choice in instructing a lawyer. The CJEU held that the requirement that the insurer must decide if lawyers are to be instructed was too restrictive. The Claimant’s freedom of choice as to their representative should not be dependent upon the insurer’s view on whether it is necessary to instruct lawyers. However, the insurers might not necessarily have to meet the costs in full.