The Supreme Court today begins a two-day hearing in Haven v Gavin Edmondson Solicitors Limited which could go a long way to ending the debate over insurers who contact injured parties directly after solicitors have notified them of a claim.

In the Court of Appeal, meanwhile, City firm Mishcon de Reya is preparing to challenge a ruling which left it liable for £1m losses suffered by a conveyancing client who bought a property from a fraudster posing as the owner.

The Law Society will intervene in the Haven case and has sought permission to intervene in the Mishcons case. Both are set to have major costs and indemnity insurance implications for other firms working in both sectors.

In Haven, solicitors who were successful in the Court of Appeal will urge judges to stop insurers settling claims directly with claimants on terms that do not provide for their representatives to be paid under the portal scheme.

The Law Society said: ‘We are asking the Supreme Court to confirm that the equitable lien can be applied to protect solicitors’ rights to their costs in modern litigation; particularly in fixed-costs regimes where the indemnity principle does not apply.’

The Dreamvar v Mishcon de Reya judgment last year set off alarm bells across the legal profession, as the High Court effectively ruled that insured solicitors were best placed to carry the financial burden of fraud, even where they had been neither negligent nor dishonest.

Joe Egan, Law Society president, said: ‘Where a solicitor has carried out his or her duties in full compliance with those requirements, we do not believe they should bear the loss on behalf of a defrauded purchaser.’ The case is set to be heard later this month.