Insurers face ?1bn 'no win, no fee' bill

Insurers face up to £1bn in costs after the court of appeal yesterday ruled that they should hand over withheld payments to successful claimants of "no win, no fee" cases.

Lawyers claimed a victory against a number of insurers, including Norwich Union, Britain's biggest, after three appeal court judges rejected insurers' claims that solicitors were not fully complying with the law regarding such conditional fee arrangements.

Insurers have refused to pay out claimants' costs and legal fees for more than 200,000 successful cases in the past year. They argued that lawyers were failing to comply with the Access to Justice Act 1999 by delegating the requirement to explain a case to clients to unqualified staff.

The judges welcomed an end to what they called "trench warfare" between the two sides. They said the purpose of conditional fee arrangements (no win, no fee) was to enhance access to justice not to "impede" it and that so long as the advice given was appropriate, delegation to a non-lawyer was fine.

The Association of Personal Injury Lawyers welcomed the ruling but said it was difficult to put a figure on the amount insurers might have to pay out.

David Marsh, president of Apil, said: "Finally we have a clear decision which should put an end to the petty arguments which have log-jammed the courts and delayed payment of compensation."

Norwich Union said it accepted yesterday's ruling but would go back to court to query how the system of delegation will be monitored.