If you are contemplating legal action, however strong your case, no lawyer will tell you that your case is guaranteed to win. Should the worst happen and you lose, you could be responsible not only for meeting your own legal costs but also those of your opponent. When you start to delve into what those might be, you very quickly realise how risky the process can be.
There is good news. After the Event Insurance (ATE Insurance) is relatively new to these shores but can provide an effective way of offsetting those risks of litigation.
In essence, ATE Insurance works like any other insurance policy. You pay a premium, set against the value you wish to insure, to protect you against having to pay out large costs and your opponents should your case fail.
So what exactly are those costs? In every case there will be fees to pay for your solicitor, barrister, any experts involved in presenting your case and court fees.
Just as you are incurring these costs on your side, so too is your opponent. When a case is lost the losing side is invariably told to pay part or all of the winning side’s fees, or costs. What this means is that you’d be fine if you won or settled out of court but could face a large bill for both sides if you were to lose.
Whilst ATE Insurance can’t protect you from this entirely it can reduce costs by approximately 70%. Although you would still have to pay your own solicitor’s fees, your insurance would cover everything else.
Perhaps you are wondering where the catch is… presumably the premiums are very high? Premiums depend on the type of case and the level of indemnity required. They are usually about 20% of the insured amount and payable at the start of proceedings. Although on the face of it this looks expensive, these too are recoverable from your opponent should you win (assuming you can prove that they are a reasonable amount) or can be included in the insured amount i.e. you would not have to pay it if you lost. If you are not able to afford an up front premium they can sometimes even be deferred, again depending on the case. In essence you get a refund of the premium whether you win or lose. This effectively means there is no cost to you at all in obtaining insurance to cover all your opponents costs i.e. costs protection at no loss at all to you!
The benefits of having ATE Insurance are huge. Not only does it give you financial certainty and peace of mind, it can also encourage early settlement without going to court. Your insurance company will have considered the strength of your case before offering you a policy and will offer substantial premium discounts for those cases settled early. This gives a firm message to your opponent who may, as a result, be looking for an opportunity to minimise potential costs to themselves.
I’m sure that right now this sounds too good to be true… does this really mean that there is such a think as risk free litigation? No litigation is totally risk free but this does mean it can be rather more worry free.
Wards Solicitors can work with you to investigate the opportunities for ATE Insurance in relation to any claims that you may have.
Elizabeth Fry is head of disputes at Wards Solicitors and can be reached on firstname.lastname@example.org