DRN-6285969

The complaint Mr P and Ms K are unhappy with what Liverpool Victoria Insurance Company Limited (LV) did after Mr P claimed on their legal expenses insurance policy. Although the policy is in joint names the claim and complaint relate to Mr P so I’ll mainly refer to him in this decision. What happened In May 2024 Mr P contacted LV seeking assistance from his policy with an employment dispute. At the end of November 2024 panel solicitors agreed aspects of the claim had reasonable prospects of success. I’ve already issued a final decision on a complaint Mr P made about delay in the claim being progressed. I agreed LV’s offer of £150 and backdating cover to when an ET1 form was submitted was reasonable. Mr P then disputed the £100 hourly rate LV was proposing to pay his solicitors. In March 2025 his solicitors said the claim had settled and an hourly rate in line with the County Court guideline rates should be paid. LV offered a blended rate of £180 an hour plus VAT for all fee earners involved with the claim. Mr P’s solicitors said that wasn’t acceptable as most of the work had been carried out by Grade A and B fee earners for whom the guideline rates were higher. LV asked Mr P’s solicitors for a copy of the settlement agreement with his employer so it could establish whether legal fees were included in that. No further response was received from Mr P’s solicitors. Mr P said the agreement was confidential and he wasn’t able to disclose it. LV asked for more information on the confidentiality clauses it contained and asked if he could provide the terms covering the payment of legal fees. Mr P said he wasn’t able to do so. Our investigator thought the £180 hourly rate LV had offered to pay was reasonable. It represents a blended rate between a Grade C and D fee earner under the County Court guidelines. And Mr P’s solicitors hadn’t evidenced the case required a higher grade fee earner. She thought it was reasonable LV asked for the terms of the settlement agreement so it could establish what (if any) legal costs were included in that. If Mr P had concerns about disclosing that he could have discussed with his solicitors what he was able to provide. She accepted there had been some delay by LV in progressing matters but didn’t think that impacted the overall claim journey and didn’t think there was anything it needed to do to put things right. Mr P didn’t agree. He said no experienced solicitor would work for LV’s initial offer of £100 an hour. It said in a call with him on 16 April 2025 it would look to agree County Court guideline rates as it had done on previous cases. And LV could have contacted his employer if it wanted to know more about what the settlement agreement contained. He didn’t think it reasonable he should have to make further payment to his solicitor to assist with this. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint.

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The relevant rules and industry guidelines say LV has a responsibility to handle claims promptly and fairly. It shouldn’t reject a claim unreasonably. I’ve thought first about the hourly rate LV offered to pay Mr P’s solicitors. The policy terms say where a policyholder chooses to use their own representative they will be appointed to act in line with LV’s standard terms of appointment. LV says the amount it’s prepared to pay for unrecovered costs on a case of this nature is £100 an hour (plus VAT). However, where a policy doesn’t clearly state the rate to be paid we would go on to consider whether the amount offered is reasonable on the basis of evidence provided by all of the parties. In this case Mr P says £100 an hour isn’t reasonable. But I don’t need to consider whether he’s right about that because LV subsequently agreed to pay £180 an hour (plus VAT). So it’s that amount which is in dispute. And that amount does take into account the County Court guidelines rates and represents a blended amount falling between (but towards the top end) of rates paid for a Grade C and Grade D fee earner in Mr P’s part of the country. I appreciate Mr P’s solicitors didn’t agree that amount was appropriate. But that appears to have been on the basis higher amounts had been paid in other cases they’d been instructed on. And the costs in this case had been incurred by Grade A and Grade B fee earners. However, the solicitors didn’t explain why there was a requirement for fee earners at that level to progress this claim. I haven’t seen any other clear evidence to show why, in the circumstances of this case, a higher amount should have been paid. In the absence of that I think the £180 (plus VAT) LV offered was reasonable. I appreciate no payment has so far been made at that or any other hourly rate because LV hasn’t had sight of the settlement agreement relating to Mr P’s claim. The terms of his policy include as a condition for cover to be provided that the policyholder must “provide, at your own expense, information relevant to your claim…”. And the policy doesn’t cover “legal expenses incurred by your legal representative…which are recoverable from a court, tribunal or other party”. A note of a telephone call with Mr P on 16 April 2025 records him as saying some fees were included in the settlement agreement. So I think it was reasonable LV asked for a copy of that agreement so it could satisfy itself costs it was being asked to pay hadn’t already been refunded to Mr P under the terms of that agreement. Mr P was concerned at providing the agreement because he said it was confidential. However, I think it was appropriate of LV to therefore ask if he could provide the relevant clause relating to that or provide only the section of the agreement which related to the payment of legal costs. Mr P instead suggested LV contact his employer on a ‘without prejudice’ basis. But it’s for him to show he’s suffered a loss as a result of an insured event under the policy. I don’t think it would have been unreasonable of Mr P to approach his solicitors for advice about this matter. And if the agreement couldn’t be disclosed those solicitors could have advised LV of that and explained their understanding of the position on costs. I appreciate there may have been a cost to Mr P in contacting his solicitors but I’m not persuaded that’s one it would be unreasonable for him to incur in the circumstances. I accept there were nevertheless some delays by LV in responding to correspondence from Mr P (and initially his solicitors). But I don’t think the nature and extent of those delays requires LV to go beyond the apology it’s already provided for this. My final decision I’ve decided not to uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms K and Mr P to accept or reject my decision before 26 May 2026.

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James Park Ombudsman

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