Attorney Fee Insurance

What is Attorney Fee Insurance?

Attorney Fee Insurance or Litigation Insurance is a policy taken out by a plaintiff to provide an indemnity for the fees and/or out of pocket costs they incur when pursuing a commercial dispute (litigation or arbitration). If the case is unsuccessful, the insurer reimburses the plaintiff for the insured legal fees and expenses up to the agreed budget. This can help in-house counsel to manage their legal budget and avoid any unexpected surprises.

The premium for Attorney Fee Insurance is often fully contingent upon success, but typically costs less than one third of the return charged by litigation funders, which is a key differential that attorneys need to be aware of when advising their clients on potential litigation finance options. It also means insurers can consider matters where the economics (i.e. the ratio of likely damages to the litigation budget) would not be viable for traditional litigation finance.

While Attorney Fee Insurance can be used in isolation, it can also work alongside a litigation finance arrangement. For example, an insurer might cover the attorney fees in parallel to a litigation finance company funding the out of pocket costs.

Attorney Fee Insurance Provides a Cost-Effective Solution

If you’re a business that has the ability to self-finance your dispute, but are nevertheless keen to secure greater certainty over your budget and risk exposure, then Attorney Fee Insurance provides a cost-effective solution. We say cost-effective, because the premium payable for Attorney Fee Insurance typically costs less than a third of the cost of Litigation Finance options, which is why many litigation finance companies themselves often insure their risk capital on a similar basis.

At TheJudge, we’re the global leaders in making this specialist form of insurance available directly to you. It is the ideal tool for clients who wish to self-finance their lawyers fees and/or out of pocket costs, and has the potential to fundamentally alter how Canadian corporate enterprises manage their litigation and arbitration budgets going forward.

“Air Canada has its share of significant litigation matters that entail a high expenditure on fees and disbursements. While we have the ability to self-fund, in some circumstances we might prefer to hedge the economic risk of a negative outcome. In these situations we find litigation insurance to be a very cost effective way of hedging our risk.”

– Air Canada

Cover for smaller and large value disputes:

Unlike third party finance companies who will often only consider claims in the tens of millions or above, insurers are keen to have a wider book spread, which means they will consider cases where the legal fees budget are as low as $200,000 through to multi-million dollar budgets.