In his Euro blog last week, Jonathan Goldsmith could barely hide his excitement following the judgment by the European Court of Justice in the Eschig case, in which it was held that a clause in an Austrian legal expenses policy did not in fact allow the insurer to insist that all claimants in a class action should be represented by the same lawyer, due to the ‘free choice of lawyer’ provisions of the 1987 legal expenses insurance directive.

Mr Goldsmith saw this as ‘the revenge of the lawyers’, but in reality the case, in which the outcome was always entirely predictable, represents nothing more than a pyrrhic victory and a serious blow to affordable access to justice through legal expenses insurance.

When the directive was drawn up a quarter of a century ago, the policymakers of the day could hardly have imagined the current legal scene: legal expenses insurance is almost universally available throughout Europe, state legal aid systems have been largely dismantled and, at least in England and Wales, legal expenses insurers are now on the verge of owning law firms which will deliver legal services to policyholders in every key area where efficient and effective representation is needed.

At least in most of the UK, the historic lawyers’ monopoly is about to end and a revolution can be expected. Legal expenses insurers are well used to delivery of high customer service standards and to robust independent government regulation, supported by effective consumer protection, which, when the barriers come down and real choices exist, will lead to only one outcome; victory for the consumer.

Mr Goldsmith also paints a picture in which policyholders have a ‘right’ to choose a lawyer from the moment they have a claim, but he has perhaps overlooked the fact that the vast majority of legal expenses insurance claims are in fact settled to the satisfaction of the policyholder before proceedings are issued, or outside court in employment tribunals, where in both cases it is not necessary for lawyers to be appointed to act. Therefore, the question of free choice of a lawyer arises in only a minority of cases and insurers are therefore free to either use their own lawyers or appoint carefully selected law firms, well suited to the task in hand. And who can blame them? Research by the University of Amsterdam confirms that across Europe it costs on average six times more to appoint a ‘free choice’ lawyer in a typical personal injury case compared to an in-house lawyer, to do exactly the same work for the policyholder.

If legal expenses insurance is to remain an affordable route to justice in the UK, it is important that any interpretation of the directive keeps in mind that insurers also have the right to deliver cost-effective legal services to policyholders in most cases and they are not simply in business to pay unnecessary or excessive legal bills.

Paul Asplin is chief executive of DAS (legal expenses insurer) and vice-president of the International Association of Legal Expenses Insurance.