• Have you ever shied away from taking a grievance
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to court because of the cost of legal fees? Although British justice is of a high calibre, it's a fact of our legal system that even winning a case can cost money, as the legal bills sometimes outweigh the value of the award. Without the financial muscle to follow a case through to the end, which may well mean all the way to the House of Lords, you can easily give up in despair at the outset.
Legal expenses insurance offers a way round the problem. Under this cover, the insurers meet various expenses involved in the pursuit or defence of legal rights in or out of court, up to a single-incident limit laid down in the policy. This limit is usually £25,000, but can be as much as 100,000 in some cases.
These expenses normally relate to fees paid to the legal profession and expert witnesses. They also pay for the wages and salaries of employees attending as witnesses on the policyholder's behalf. In addition, they cover the policyholder's liability for court costs or opponents' costs awarded against him.
Basically, legal expenses cover is a means of funding litigation.
EXPENSIVE
Disputes, sooner or later, seem inevitable, no matter how well we run our businesses. Solving them can prove expensive, especially if a case goes to court.
Most insurers offering this kind of protection also include a 24-hour telephone advice line to provide vital first aid legal assistance. Such services are welcomed by consumers because they often have the effect of nipping problems in the bud before they have a chance to escalate. For instance, an industrial dispute may blow up quickly or a supplier may turn awkward over some equipment he has delivered which proves to be faulty. "Haulier's legal protection policy issued by DAS Legal Expenses Insurance is aimed at any haulage company which wishes to ensure that in the event of a legal dispute, sufficient funds will be available to provide the best possible assistance from us," says Paul Asplin, DAS business manager.
Cover is provided for legal fees of up to &!100,000 for each claim — and there's no limit to the number of claims which can be made by the policyholder.
If a legal problem arises in an area covered by the policy, DAS will give legal advice. If the problem cannot be sorted out simply and legal action is needed, the DAS claims department will, if necessary, arrange for a lawyer to be appointed to represent you.
Five sections are available in the policy: employment; legal defence; contract cover; property, personal injury and accident loss recovery; and Inland Revenue investigations and VAT tribunals. Several of these sections are sub-divided to provide even greater choice. Cover is flexible and can be extended to cater for most special legal expenses insurance needs.
The first section relates to employment disputes and the cover here could be useful should your firm face court or tribunal proceedings from an existing, past or even prospective employee. If you need to defend your legal position, this cover pays legal costs and expenses. The wide range of legislation in this direction includes employment protection, equal pay, redundancy, trade union matters, sex discrimination and race relations.
Legal defence is the next section. Haulage businesses are subject to a maze of legislation, such as the Road Traffic Act, the Health and Safety at Work Act, the Companies Acts, Trades Description Act, Data Protection Act and so on. All are being enforced with increasing effective ness. Another potential loss for a business can be the temporary absence of staff called for jury service. All this is covered by legal defence insurance.
Contract cover relates to disputes over the purchase or sale of goods and services, or the purchase, sale, hire or maintenance of motor vehicles. It is vital that legal costs are available to pursue or defend such disputes, though this section does not include cover for the recovery of undisputed debts.
MAINTENANCE
tinder section four comes property, personal injury and accident loss recovery. If your vehicle is involved in an accident where the third party is wholly or partly to blame, you may be faced with substantial uninsured losses.
Even with a comprehensive motor insurance policy you may face a number of uninsured losses which high legal costs may prevent you from recovering from the party at fault.
As regards property protection, every business occupies premises, which it owns or rents, and possesses goods and equipment. At any time these goods and premises can be damaged or threatened with damage. It is important to have the necessary financial strength and expertise to start proceedings, where appropriate, to protect legal rights.
The personal injury cover applies if any employee is killed or injured as a result of an accident at work. Cover is provided so that a claim may be pursued for compensation, including loss of wages.
Section five covers Inland Revenue investigations and VAT tribunals. The policy gives cover for the fees and expenses of legal representation, where needed, including accountant's fees.
On similar lines, Allianz Legal Protection offers its commercial lawplan con
tract: "Our policy contains a section relating to debt recovery and this is proving popular," says John Long, managing director of Allianz.
The commercial lawplan is available from about .£50 upwards. "But we've written some schemes for trade federations and associations to provide this type of cover for members — and the larger the groups, the more the net cost per business can be reduced," says Long.
IRPC Legal Assistance offers a commercial legal assistance policy. Stephen Manton of IRPC says: "We give up to £50,000 of legal costs so that the policyholder can pursue or defend disputes in areas as varied as employment protection legislation and investigations by the Inland Revenue.
"Our commercial policy has been carefully structured, drawing on the experience of a policyholder base of around 90,000 commercial concerns."
The latest insurance provider in the field is Provincial Insurance, based in Kendal, with its commercial legal expenses package policy introduced last year. The cover is on the normal wide lines. Legal expenses insurance is almost a 'must' for prudent businesses in these litigious days. But obviously, premiums deend on the exact cover required.
11 by John Vann