Ombudsman's casebookA monthly column of examples from the files of the Legal Services Ombudsman

He who pays the piper...In many cases, legal aid is no longer there to pay the costs of litigation.

This has led to a growth in alternative funding methods, such as legal expenses insurance.

Inevitably, however, as with cases paid for by the taxpayer, the person with the cheque book - in this case the insurance company - will have a big say in the conduct of the case.

This sometimes comes as a shock to clients.

The following examples serve as a reminder to the profession that, right from the start of a case, they should make it clear to clients that the financial interests of the insurer will often be more important than their own wishes.

Good communication and managing expectations down to realistic levels from the outset could save a lot of grief - and time - for solicitors later on.Back seat driver Mr G's parked car was badly damaged when it was hit by another car.

Incensed by the actions of the driver, Mr G chased him down the street and in the process fell over and hurt himself.

His legal expenses insurer put him in touch with a solicitor to make a claim against the offender to the tune of several thousand pounds.

The relationship got off to a shaky start when the solicitors refused to sue within six days of instruction and copy every letter to Mr G as the case went on.

The solicitors said that they owed it to the paying insurer to investigate a case properly and not spend money on non-essential copying.

Eventually, the solicitors called a halt to the case, telling Mr G that his claim for personal injury was a non-starter and that he should accept the 160 offered by the other side for his insurance excess.

They said that the insurer backing the court case would not pay any more of Mr G's legal bill and, if he wanted to carry on, he was on his own.

Mr G was not impressed and complained to the Office for the Supervision of Solicitors (OSS).The OSS took the view that the solicitors were not at fault, that the decisions they had made were matters of professional judgement and that they had a duty not to embark on or continue with pointless litigation where the insurers were picking up the tab.Mr G complained to the ombudsman that the OSS was wrong and argued that the solicitors should pay compensation.

The ombudsman supported the stance taken by the OSS.

She agreed that, where litigation is being paid for by insurers, they and not the client are very much in the driving seat when it comes to deciding how to conduct the case, even where this is at odds with the wishes of the client.Great expectationsMs R was injured in an accident and her legal expenses insurers instructed a solicitor to start proceedings.

Initially, the solicitor's view was that Ms R would be in line to receive damages of 10,000, but he became less enthusiastic when the barrister in the case said that something in the order of 6,000 was nearer the mark.

In the end, the legal team advised Ms R to settle for just over 5,000, because there was little chance of the court awarding a larger amount and the insurers would withdraw their backing if she did not settle.

Ms R thought the solicitors should have negotiated a bigger payout and complained to the OSS.

The OSS quickly decided that it could not get involved, because it would mean second-guessing the solicitor's professional opinion.Ms R approached the ombudsman to complain that the OSS had ignored her complaint and that it was simply wrong.

The ombudsman disagreed.

She accepted that the solicitors had a duty not only to Ms R, but also to the insurers who were funding the case.

In deciding to recommend settlement the solicitors had posed the question whether a privately paying client would continue litigating in the circumstances and concluded that he or she would not.The ombudsman agreed that this was a reasonable approach and endorsed the OSS view that it could not assist.