By Philip Hoult
Giant insurance company Royal & Sun Alliance is understood to be among a number of insurance companies that have asked firms to do work on a 'no win, no fee' basis.
The insurer is believed to be exploring the possibility of 'no win, no fee' agreements in cases where it has already paid out to the insured and, through its right of subrogation, stepped into the plaintiff's shoes in a bid to recover the money paid out from the defendants.
As Legal Week went to press, nobody at Royal & Sun Alliance was available to comment on the controversial move.
But the head of legal at another leading insurer said: "At the moment we are not actively considering this, but I know that a number of companies are."
Leading litigation lawyers have reacted with scepticism to news of the proposal. "It is difficult to see how it would work," one said.
Another leading litigation partner said: "It is ironic that a company who receives money in advance through payment of premiums is asking its suppliers to accept delayed payments."
He added that to make the scheme work the law firms in question would have to cherrypick cases that they were certain to win. The firms would also have to be extremely careful about their cashflow position if they decided to take on cases.
Royal & Sun Alliance confirmed last week that it was in talks to buy fellow insurance company Guardian Royal Exchange for £3.4bn, the latest move in a wave of consolidation in the insurance industry.
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