Personal injury: law firm sues over alleged breach of contract to provide cases


Top insurer Norwich Union has agreements with solicitors that see it earn a large proportion of the legal fees generated in claimant personal injury cases by its motor policy holders, it has been alleged in court documents.


The insurer is facing High Court proceedings for breach of contract brought by Horsham law firm Reeds - formerly LawLine Solicitors - after mediation between the two sides broke down last week.


A witness statement given by Chantal Reed, senior partner of Reeds - a statement which is now in the public domain - claims that the contract enabled Norwich Union and its subsidiaries to earn effectively two-thirds of the firm's claimant personal injury legal fees in return for referring 4,000 cases a year and being a lead panel solicitor.


Ms Reed alleges that the arrangement was put in place through a complex web of agreements that obliged Reeds to instruct and pay another Norwich Union subsidiary to perform non-legal work such as collecting witness statements.


Reeds is suing the insurer for breach of contract, claiming that the referrals dried up one year into the five-year contract. It claims that it is still constrained by an exclusivity clause tying it to the subsidiary for personal injury work.


Ms Reed said: 'It is increasingly apparent that, as a large and influential organisation, Norwich Union and its subsidiaries are able to call for business best practices publicly, such as transparency and decreased claimant costs, but in reality, follow a more profitable commercial option.'


A Norwich Union spokeswoman said the company would not comment on on-going litigation. The High Court hearing is scheduled for 11 April.