Legal Expenses Insurance - how does it work?

Lancs1961

I'd be very grateful for help with this. I've summarised - the full details would go on forever.

I moved to a house in 2011. I had legal expenses insurance. One of my neighbours was a total idiot whose whole life revolved around making those of his neighbours difficult. This resulted in litigation (started by the neighbour, not me), in which I was wholly successful. I was awarded injunctions (harassment) and £9k in damages for the way I was treated and very significant costs (almost £70k).

Eventually the neighbour moved out and his house was sold to pay his debts, for £150k. Half went to his former wife, leaving about £75k. From that a charge (don't know how much, but presumably substantial) was paid to his former solicitors, who had taken a charge against his house. There was not enough left to pay my damages plus accumulated interest (then about £4k) plus the legal expenses. I eventually received my £9k damages, but not my £4k interest.

I've been in touch with teh solicitor several times since asking when I would receive the interest, which I need, but I didn't receive a coherent response.

Today I've spoken to the solicitor, who has explained that a 'deal' was done between the solicitor and the insurance company for me to receive my £9k and for the rest of the money (I don't know how much that was) to be split between them. The money that went to the insurance company was in respect of a payment of £25k that they'd made in advance to the solicitors, on account of fees.

So: I've not received my interest, I believe the insurance company has not had the whole of the £25k back and the solicitors have not received their full fee.

Here's the question. I was not involved in any way in the discussion between solicitor and insurance company about how they would apply the monies remaining after sale, following payment of the former wife and the charge that stood in front of mine. Although my name is on the court papers the solicitors and insurance company have never really treated me as the client - it's always been teh case that the solicitors have treated the insurance company as their client.

I've been told today that the insurance company has agreed to pay for an application for a charging order to be made against the idiot neighbour's other house i.e. the one he now lives in mortgage free. I'm told that I will eventually get my interest, but since the judgement in this case was back in 2015 it seems likely that I could be waiting at least another couple of years.

Bearing in mind that I had legal expenses insurance, and that the insurance company does not dispute that I was (and still am) covered, should the solicitors and insurance company have been paying themselves before paying me my interest? I understand that they wouldn't have been paying me if they'd not recovered the money, but it's clear that they did recover enough money to pay both my damages and my interest, but that they've taken some themselves perhaps thinking that I wouldn't think to ask about interest.

If this is fair then I'll be happy to wait, but I can't help feeling it isn't right. Can anybody please help? If it might be wrong I'll go and pay for legal advice from another firm, but I don't want to do that if I've misunderstood the way it works.

Again, I'd be very grateful for any informed advice about this. It's been dragging on for literally years and I'd very much like to be able to put it behind me.

huckster

Your question is probably more about the legal side of things, rather than Insurance.

I think once the damages have been paid to you, the interest is a secondary issue and I believe that the Insurance company, plus the Solicitors may be correct in how they have split the amount left over.

Cannot point you to the legal rules regarding how this was handled, but your detailed description seems very familiar to what I have read before.

Suggest asking the Solicitors in writing for an explanation of the legal/accounting rules they have followed.

Legal expenses Insurance contracts often contain clauses, which also allow them to act in certain ways. The Insurers can be favoured, rather than the policy holder. So you could also write to the Insurers asking for an explanation, asking them to cite any clauses in the policy, which has allowed decisions to be made about settlement.