Some 2.5 million Dutch people have legal expenses insurance. The basic premise for many legal aid insurers is that an insured will be helped by one of the dozens of jurists or lawyers employed by the legal aid insurer.
The moment legal proceedings have to be started or are initiated against an insured, the insured has the choice to (1) be assisted by one of the lawyers/lawyers employed by the legal expenses insurer or (2) engage an (external) lawyer himself. The latter is the free choice of lawyer.
The free choice of lawyer is regulated by a European directive. The Netherlands has laid down the rules from the directive in the Financial Supervision Act (Wft). Dutch law provides that an insured person may be represented in proceedings by an external lawyer.
Free choice of lawyer in all court proceedings, proceedings at the UWV and objection proceedings in administrative law
A few years ago, there was discussion about whether the free choice of lawyer also applied in court proceedings for which it is not required by law to use a lawyer, for example in cases before the district court (cases against an employer or cases with a claim up to €25,000).
At 2013 the European Court of Justice ruled that the Directive should be interpreted to mean that when every legal proceedings the insured may choose between a jurist or lawyer of the legal expenses insurer or an external lawyer. Thus, the right to a free choice of lawyer also applies to proceedings for which a lawyer is not required by law.
In 2016, free attorney choice was further expanded. Also in proceedings at the UWV or objection procedures In administrative law, free choice of lawyer applies.
Free choice of lawyer even in pre-litigation phase
Retrieved from May 14, 2020 the Court of Justice ruled again on the right to the free choice of lawyer. The Belgian Bar Association had submitted to the Court of Justice the question of whether a mediation procedure regulated by Belgian law, in which the parties reach an agreement out of court but the judge gives some kind of consent upon reaching an agreement, is also subject to the free choice of lawyer. The Court of Justice ruled that it does.
The Association of Insurers has recently taken the position that the ECJ ruling does not apply to Dutch legal expenses insurers. This is because the ECJ case involved the question of whether the free choice of lawyer applied to an insured in the Belgian law regulated (compulsory) judicial or extrajudicial mediation and we do not have that specific regulation in the Netherlands.
That, in my opinion, is too short of the mark.
In many personal injury cases, a resolution of the case is sought out of court. If a settlement is reached, a settlement agreement is often reached. That settlement agreement usually does not need court approval, but it does if the case involves a minor or someone under guardianship or receivership. For such cases, the Court's ruling seems to apply one-to-one.
I believe that free choice of counsel goes beyond that. In fact, the Court of Justice has generally held that ‘legal proceedings’ within the meaning of the directive include not only the proceedings themselves, but also the phase preceding them that may lead to legal proceedings. According to the Court, the free choice of lawyer includes “any stage that may lead to court proceedings, even a preliminary stage”.
Furthermore, the Court considered (i) that the purpose of the Directive is to enable insured persons to be assisted in proceedings by the same representative as before, (ii) according to the Court, the rights of a legal expenses insured should be interpreted broadly, and (iii) alternative methods of dispute resolution (think mediation) should be encouraged and in that light it is not appropriate to restrict the free choice of lawyer.
In that light, I believe that it can be inferred from the ruling that the free choice of lawyer applies not only at the time when proceedings must be initiated, but also before.
If you have questions about this blog, please contact the author, Mildred Brun.