Legal expenses insurer Litigation Protection has teamed up with Surrey-based Singer & Friedlander Insurance Finance to provide an insurance solution for solicitors prepared to fight cases on a conditional fee basis.
The groundbreaking scheme helps solicitor firms obtain working capital while they await payment for so-called "no-win, no fee" cases.
Brian Raincock, managing director of Litigation Protection, said solicitors' main concern with the conditional fee system was the capital implications that increased litigation work can impose on their firms. He explained: "The main problem for solicitors wanting to take on more work under conditional fee arrangements, or under contract with insurers, is the constraint imposed by the lack of working capital."
He said the insurance partnership was designed to overcome this problem.
Raincock, whose firm has provided legal expenses insurance since 1993, added that the plan will also help extend access to justice, especially in personal injury cases, in line with the Lord Chancellor's stated wishes.
Under the arrangement, Litigation Protection will place insurance cover for a solicitor firm's caseload of conditional fee cases.
The cover also provides security for Singer & Friedlander to provide additional funding to solicitor firms for work in progress.
Raincock estimates that many of the annual 80,000 personal injury cases could eventually be fought on a conditional fee basis. The market for "after the event" legal expenses insurance alone, which involves the payment of a premium to cover legal costs, could reach £50 million a year.
The first scheme has been arranged for London-based solicitors Kingsford Stacey Blackwell. Its success has allowed it to expand its personal injury department to employ, eventually, 60 people. Raincock added that another ten law firms had shown an interest in the scheme.
Simon Pinner, a partner with the law firm, explained: "We are now able to build our business and accept volume work, with considerable potential for the future."