A legal ruling has struck a major blow for insurers against claimant personal injury lawyers.

In Samonini v London General Transport Services, the court ruled that a conditional fee agreement was invalid and no costs were payable due to the solicitors' failure to properly consider alternative sources of funding, such as ‘before-the-event' (BTE) insurance.

The court also ruled that the ‘after-the-event' (ATE) insurance premium of £798 in a case where damages were "never going to exceed £2,000," was "disproportionate".

Legal Costs Negotiators negotiations manager Simon Gibbs said the ruling was likely to be seized upon by defendant insurers, as the level of premium was similar to that in many other cases with low levels of damages.

"The view of the senior costs judge that such premiums are prima facie disproportionate will make it considerably easier to persuade courts to reduce such premiums," said Gibbs.

But DAS legal expenses assistant general manager Tony Buss said the ruling related to a case brought in 2002 when companies such as TAG and Claims Direct were still operating.

Allianz Cornhill Legal Protection divisional manager Phil Ruse said the judgment was "neither unusual nor unexpected" as it was a solicitor's duty to investigate alternative funding methods.