A solicitors' insurers (even a non-party to proceedings) could be liable for the cost of litigation where the insured was negligent.
The Supreme court judgement of Marley v Rawlings [2014] concerned the validity of a will. A married couple wrote and signed identical wills, however, by an oversight of their solicitor, each signed the other’s will. It was held that the wills should be interpreted in accordance with the intention of the testators and rectified accordingly.
The question had arisen as to how the costs should be borne. The court held that the original solicitors’ insurers, who were no party to the proceedings, should pay the costs of both parties.
Whilst the usual principle of the losing party being liable for the costs would apply, the court took the view that the original solicitor’s negligence should not be ignored. The insurer had underwritten the appellant's costs and had required it to bring the case to attempt to have the wills upheld. Therefore, the correct approach was to order the insurer to pay the costs directly.
The full judgment can be found here.