Kerry Underwood

INSURERS AT IT AGAIN ? (4)

with 19 comments


A solicitor’s client is referred to DLG Legal Services Ltd (DLG), part of the Direct Line Group (DL). It is regulated by the Solicitors Regulation Authority but from its website it seems only to accept clients who have a DL legal expenses policy. It is a firm of solicitors, not an Alternative Business Structure.

A client care letter is sent by DLG at a flat rate of £275 an hour plus VAT, whoever is dealing with the matter. I have a copy of that letter.

They are way above the rates that DL will pay to firms of solicitors instructed as the client’s choice. So it pays itself getting on for double its usual rate.

Its client care letter has this odd paragraph, under “Introducers”:

” This firm is appointed by Direct Line. This firm is a member of the same Group of companies as Direct Line. Aside from that your insurer has no financial interest in referring your case to us. The advice we give to you will be independent.”

That is a variant on the old chestnut “Apart from that how did you enjoy the play Mrs Lincoln?”

In a free market why do not DL put the work out to firms who will happily work for a much lower rate than that?

See also my related blogs:-

INSURERS AT IT AGAIN (5)

EVER SEEN WORSE TH>N MORE TH>N? – INSURERS AT IT AGAIN (6)

INSURERS AT IT AGAIN (1) AND (2),

CLINICAL NEGLIGENCE – DEFENDANTS AT IT AGAIN (3),

MEDICAL DEFENCE UNION: A SUITABLE CASE FOR TREATMENT

SETTLEMENT AGREEMENTS IN PERSONAL INJURY

DIRECT LINE OR DIRECT LYING? – INSURERS AT IT AGAIN (7)

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Written by kerryunderwood

October 16, 2015 at 8:20 am

Posted in Uncategorized

19 Responses

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  1. Let me guess…So they can make more profit and get the customer to pay for it by raising premiums, then whinge about rising legal costs and pay some money to political parties to further their own aims and in so doing deflect from the fact that it is their own greed which is driving the insurance market? Sounds plausible enough to me.

    A. Cynic

    October 16, 2015 at 10:04 am

    • Oh surely not😄😄😄. That is like suggesting that insurance companies would complain bitterly about referral fees at the same time as being the biggest recipients of them. Oh, they did didn’t they?

      Kerry

      kerryunderwood

      October 16, 2015 at 10:07 am

  2. Presumably the same reason that solicitors were keen to instruct medical experts via their “captive” MROs??
    Ker-ching.

    Mac McCaskill

    October 16, 2015 at 11:58 am

  3. They have to pay for the TV Adverts somehow. Or perhaps “Call me Dave” has had them around to No 10 again for a cosy chat.

    James

    October 16, 2015 at 3:29 pm

  4. I would be very surprised if Direct Line group pay themselves such an hourly rate. Even if they did it’s surely just money shifting within DLG to comply with the indemnity principle. Thai-Trading?

    Subject to enforceability, it seems like a good way for the insurer to make solicitors profitable for DL now referral fees are gone.

    Kerry, have you got any plans to comment on A & B v The Royal Mail [2015]?

    robertpettitt

    October 16, 2015 at 11:35 pm

    • Robert

      It may indeed be a no win lower fee arrangement but that does not deal with the issue of potential conflict, nor the issue of insurers saying one thing and doing another- see my other blogs.

      Yes I will be commenting on A and B.Storm in a teacup.Obiter comments by first instance judge. No application to adult claims which are dealt with by SCCO. Re-in forces need to use Underwoods Method- charge to client should be by way of solicitor and own client shortfall not success fee.

      All dealt with at my courses and in forthcoming books😄😄

      Kerry

      kerryunderwood

      October 17, 2015 at 8:04 am

  5. […] See also INSURERS AT IT AGAIN (1) AND (2), CLINICAL NEGLIGENCE – DEFENDANTS AT IT AGAIN (3),  MEDICAL DEFENCE UNION: A SUITABLE CASE FOR TREATMENT and INSURERS AT IT AGAIN ? (4) […]

  6. Doesn’t the solicitor have an obligation to tell the client exactly what is the financial interest being disclosed by the statement that the firm is a member of the same group of companies? This could mean anything or nothing, although nothing is implied and the client seemingly being hoodwinked by the statement when it is followed immediately by a statement that “The advice we give to you will be independent.” Is this not a misconduct matter for the SRA? Also, if such terms are known by the solicitor to be considerably in excess of market rates and what may be negotiated independently, are they not challengeable in any event as being unreasonable and in breach of the indemnity principle?

    D. Issapointed

    October 19, 2015 at 12:06 pm

    • Actually not necessarily above market rate but much more than they would pay solicitors generally, that is if not connected with them. It may be that they are paying their own group company less and the rate quoted is a higher, solicitor and own client rate, which is lawful,

      It may well be a no win- lower fee arrangement.That would not breach the indemnity principle.

      Companies’ legal obligations are to their shareholders. That is why the concept of Alternative Business Structures, however dressed up, is deeply flawed.

      The SRA seems uninterested in ABS’s and their relations with clients and insurers.

      Kerry

      kerryunderwood

      October 19, 2015 at 1:18 pm

  7. […] INSURERS AT IT AGAIN ? (4) […]

  8. […] Insurers At It Again (4) I commented on Direct Line Group and its relationship with DLG Legal Services, a firm of solicitors […]

  9. […] INSURERS AT IT AGAIN? (4) […]

  10. […] INSURERS AT IT AGAIN? (4) […]

  11. […] INSURERS AT IT AGAIN ? (4) […]

  12. […] INSURERS AT IT AGAIN? (4) […]

  13. […] LIES, DAMNED LIES AND THE SMALL CLAIMS LIMIT INSURERS AT IT AGAIN (1) AND (2), […]

  14. […] INSURERS AT IT AGAIN? (4) […]


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