Insurance: Bar Mutual to pay costs
The Bar’s professional indemnity insurer has been ordered to reimburse a barrister after it withdrew funding for him to defend disciplinary proceedings because he wanted to appoint a non-panel solicitor.
The Financial Ombudsman Service found that Bar Mutual Indemnity Fund (BMIF) did not act reasonably by refusing to consider instructing a non-panel solicitor.
The case dates back to 2014, when a barrister described as ‘Mr S’ was cleared of misconduct by a Bar disciplinary tribunal.
Initially Mr S used a firm on BMIF’s panel but stopped because of a disagreement with the solicitor and insurer over the case strategy. He asked BMIF to fund the costs of a non-panel solicitor of his choice, Pinsent Masons, which it refused to do even though the firm offered to do the work at the same cost as the panel solicitors. It instead offered to pay for another panel solicitor.
However, Mr S believed that the same strategy issue would arise and instead instructed his barrister, Marc Beaumont, on a direct access basis, whose costs BMIF also refused to cover.
A Financial Ombudsman Service adjudicator upheld his complaint that BMIF had not acted reasonably and the insurer appealed. After a provisional finding in favour of Mr S in December 2015, ombudsman Peter Whiteley has maintained that in his final decision despite strong representations from the insurer.
He said: “Bar Mutual says its decision was reviewed by a committee of four experienced QCs, who considered all the issues and were able to come to a reasoned view. It was prepared to continue funding Mr S, but wouldn’t provide funding where this committee thought the defence being proposed by Mr S’s barrister was unlikely to succeed. It wanted to avoid wasting costs.
“I appreciate that Bar Mutual gave the matter some thought; this wasn’t a completely arbitrary decision. But I need to consider whether it was fair and reasonable, taking into account all the circumstances of the case. I don’t agree that it took proper account of the situation Mr S was in, or that it was properly explained to him. The e-mails sent to Mr S at the time made it clear Bar Mutual would not agree to any solicitors unless they were on its panel…
“Bar Mutual has a panel of preferred solicitors. It is of course reasonable to do that, and it’s reasonable that cases are normally referred to one of those firms. Bar Mutual says it will consider using non-panel solicitors on a case by case basis, and objected to Mr S’s choice due to the specific circumstances.
“But it was clearly never going to consider this for Mr S; it wouldn’t consider any non-panel firm – regardless of previous experience. So the decision wasn’t truly based on the circumstances… That wasn’t a reasonable basis for the decision, and placed an undue restriction on its exercise of discretion.”
He also questioned BMIF’s reasons for refusing to agree to instruct Mr Beaumont directly. “The reason given is that he needed a lot of support, which would be best provided by solicitors. It’s not clear to me how a new firm of solicitors, who weren’t familiar with the case, and who Mr S didn’t want to instruct, would be better placed to support him than the barrister who was already familiar with the case, and who he was clearly happy to have representing him.”
Mr Whiteley ordered that BMIF indemnify Mr S for the “reasonable legal costs” he incurred and that it pay interest of 8% per year from the date he paid any of the costs. He also ordered the insurer to pay £750 for the distress and inconvenience caused.
In a statement, BMIF said: “Bar Mutual provided discretionary cover to one of its members. A disagreement arose about the terms on which the discretionary cover should continue. This was referred to the Financial Ombudsman Service and Bar Mutual has complied with the decision of the Ombudsman.”
Mr Beaumont said: “The decision is important because BMIF has hitherto claimed that the insurance cover does not cover barristers for disciplinary proceedings save as a matter of discretion and that BMIF had an absolute discretion as to the terms on which it will grant cover for disciplinary cases, including terms as to the choice of solicitor and counsel.
“The decision provides that it only has a qualified discretion as to the choice of solicitor and counsel and that such a discretion must be exercised reasonably. It seems to me that if a barrister wishes to choose a well-qualified law firm and well-qualified, experienced barrister to act for him, BMIF can no longer refuse to accede to such choices by the insured barrister.”
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