Are you facing a legal dispute? Then you are entitled to a free choice of lawyer under your legal expenses insurance. Many people mistakenly believe that they must accept the legal adviser or lawyer assigned by their insurance company. That is not correct. The European Court of Justice has confirmed in several rulings that insured persons may choose an external, independent lawyer themselves, at the expense of the legal expenses insurer, as soon as judicial or administrative proceedings are pending. In this article, you will read what this right entails, when you can invoke it and how Arslan & Arslan Advocaten can assist you.
What does free choice of lawyer under legal expenses insurance entail?
Free choice of lawyer under legal expenses insurance means that you are not bound to the legal advisers employed by your insurer. Do you have to litigate before a court or another official body? Then you have the statutory right to appoint a lawyer yourself. This right is laid down in legislation and is strictly enforced.
Your legal expenses insurer will then reimburse the costs of the lawyer you have chosen, up to the maximum amount specified in the policy. The rules are intended to prevent conflicts of interest and ensure that you can rely on independent and expert legal assistance.
This right does not depend on the insurer’s approval. As soon as the need for proceedings has been established, the right takes effect. Does your insurer refuse to cooperate? Then it is advisable to seek legal advice. Sometimes it is even necessary to file a complaint with Kifid (the Dutch Financial Services Complaints Institute) to enforce your right.
When are you entitled to your own lawyer?
The right to your own lawyer arises as soon as there are judicial or administrative proceedings. This includes not only proceedings before a court, but also proceedings before administrative bodies or special tribunals. Examples include dismissal proceedings before the UWV (the Dutch Employee Insurance Agency), objection proceedings before the municipality, or complex divorces.
Is it clear that the case cannot be settled amicably and that a formal step is unavoidable? Then you can invoke your free choice of lawyer. It is not required that legal representation by a lawyer be mandatory by law. Even in proceedings in which you are permitted to litigate on your own behalf, you retain the right to engage your own lawyer at the insurer’s expense.
In addition, if your legal expenses insurer considers that your case has no prospect of success and refuses further assistance, you are entitled to a so-called dispute scheme. You may refer the case to an independent lawyer of your choice, who will issue a binding opinion on its prospects. If this lawyer finds that the case does have prospects of success, the insurer must still bear the costs of the proceedings. For more information on what you can do if your legal expenses insurance is refused, please visit our website.
The role of the European Court of Justice
The current interpretation of free choice of lawyer has largely been shaped by important rulings of the European Court of Justice. In the past, legal expenses insurers sought to limit this right by including in their policy terms that it applied only where representation by a lawyer was mandatory by law. However, in several judgments, including the well-known Sneller judgment, the European Court held that such a limitation is contrary to the European directive on legal expenses insurance. The Court ruled that the right to free choice of lawyer must be interpreted broadly and applies to every judicial or administrative procedure.
These rulings have significantly strengthened the position of insured persons. Insurers are now required to bring their policy terms into line with this European case law. This means that in many more situations than before, you can engage an external lawyer at your insurer’s expense. If you have doubts about the interpretation of your policy terms in light of this case law, it is advisable to engage a specialised insurance law lawyer who can assess your situation and advise you on the steps to take.
Costs and reimbursement with free choice of lawyer
Are you exercising your free choice of lawyer? In principle, your legal expenses insurer must reimburse the reasonable costs of the lawyer you have chosen. However, financial limits apply. Almost all insurers apply a maximum cost limit (sum insured) in their policy terms. That maximum differs by insurer and by type of case.
A lower maximum cost limit often applies to external lawyers than to in-house handling. Therefore, carefully study the policy terms before commencing proceedings or have your lawyer review them.
In addition, an excess may apply. Some insurers charge an excess if you choose an external lawyer, whereas this does not apply if you have the case handled by the insurer’s legal advisers. Despite these possible limitations, the benefit of an independent, specialised lawyer who represents only your interests often outweighs any additional costs or a lower coverage limit. A good lawyer will always communicate transparently with you about the expected costs and the coverage provided by your insurance.
How do you engage your own lawyer?
Engaging your own lawyer at the expense of your legal expenses insurance requires care. Always report your case to your legal expenses insurer first. You cannot engage a lawyer yourself and submit the bill afterwards. The insurer must be informed in advance and agree to the transfer, although it may not simply refuse that agreement if proceedings are to be commenced. Has it been established that litigation is necessary? Then inform your insurer that you wish to exercise your free choice of lawyer and state the name of the lawyer you want.
Your chosen lawyer will then contact the legal expenses insurer to arrange the handling of the case and the financial arrangements. The lawyer will request a so-called ‘assignment confirmation’ or ‘coverage confirmation’. Only upon receipt of this confirmation is it established that the insurer will bear the costs. At Arslan & Arslan Advocaten, we have extensive experience in communicating and negotiating with legal expenses insurers. We are happy to take this process off your hands, so that you can focus fully on the substance of your case. More information about the formal procedures can be found on the website of the Dutch Judiciary.
Preventing conflicts of interest
One of the main reasons for choosing your own lawyer is to prevent conflicts of interest. Legal advisers employed by a legal expenses insurer have dual loyalty: they represent your interests, but also work for a commercial organisation that seeks to control costs. This may lead the insurer’s legal adviser to favour a settlement more readily, even if continuing litigation might produce a better result.
When you engage an independent lawyer, this issue does not arise. An external lawyer has only one objective: to achieve the best possible result for you as the client. The lawyer is not bound by your insurer’s internal guidelines or cost-saving objectives. Do you have a dispute in which the opposing party happens to be insured by the same insurance company? In that situation of conflicting interests, the insurer is legally obliged to inform you immediately of your right to engage an external lawyer at its expense.
Dispute scheme: if the insurer considers the case unviable
It regularly happens that, following an initial assessment, a legal expenses insurer concludes that your case is not legally viable or that the costs do not outweigh the benefits. The insurer then refuses further legal assistance. However, this does not mean that you are left empty-handed. Every legal expenses insurance policy is legally required to include a so-called dispute scheme in its policy terms. Under this scheme, you can have the insurer’s assessment reviewed by an independent lawyer of your choice.
Do you invoke the dispute scheme? Then the insurer transfers the file to the lawyer you appoint. This lawyer assesses the case independently and issues a binding opinion on its viability. If the lawyer finds that the case does have prospects of success, the insurer is obliged to provide coverage after all and reimburse the costs of the proceedings (including the costs of the external lawyer). If the lawyer finds that the case is indeed not viable, the insurer bears the costs of this opinion, but does not have to reimburse the proceedings. In complex cases, you can also obtain information from bodies such as the BKR or Stichting CIS to strengthen your file.
Frequently asked questions
Can my insurer refuse free choice of lawyer?
No, your legal expenses insurer cannot refuse free choice of lawyer once judicial or administrative proceedings are involved. This is a statutory right confirmed by the European Court of Justice. However, you must inform the insurer in advance, and it may attach a maximum reimbursement amount, as laid down in your policy terms.
Do I have to advance the lawyer’s fees myself?
In most cases, you do not have to advance the lawyer’s fees yourself. Once your chosen lawyer has received a coverage confirmation from the legal expenses insurer, invoices are submitted directly to the insurer and paid by it, up to the maximum amount stated in the policy. You are responsible only for any excess or costs exceeding the maximum.
Does free choice of lawyer also apply to dismissal proceedings before the UWV?
Yes, free choice of lawyer also applies to dismissal proceedings before the UWV. This is considered an administrative procedure. Even if representation by a lawyer is not legally mandatory for this specific procedure, under European case law you are nevertheless entitled to engage your own lawyer at your insurer’s expense.
Also read
- Insurance law lawyer: expert assistance in disputes
- Legal expenses insurance refused: what can you do?
- Filing a complaint with Kifid – your rights, step-by-step plan and tips
Need help?
Do you have a legal dispute and wish to exercise your right to free choice of lawyer? Do not let your insurer limit you, and choose the independent and expert assistance of Arslan & Arslan Advocaten. We assess your case, contact your legal expenses insurer and fight for your interests. Contact us for a free initial consultation through our contact page: https://arslan.nl/contact/ and discover what we can do for you.
