Fighting or defending a lawsuit can be a costly endeavour, but costs can only steepen if the case is unsuccessful. Clients could well be looking for a financial safety net to attenuate the loss, which is where after the event insurance (ATE) comes in. This product covers the cost of litigation in the event that your client is unsuccessful, providing invaluable indemnity to ensure that all is not lost.
An ATE policy is an effective way to reduce financial risk, and although your client will have to fund their own case (in the absence of any funding agreement with an external litigation financier), it can nonetheless be invaluable should the case lose. There is no cap on the potential cover available for any given case, each policy is tailored to individual circumstances, making it an essential consideration for any client pursuing litigation.
Improves Lawyer-Client Relationships
Many lawyers find it difficult to point out and detail the weaknesses of a case with their clients. Lawyers may find it tough to speak frankly with clients and address the realistic merits of the case, as clients can often react adversely to criticisms surrounding their claim by the person who they view to be their source of advocacy. Clients can be – rightly or wrongly – sceptical of a lawyer’s ability to adequately advocate in their favour, where that lawyer seems too critical of the case. On the flip side, being overly-positive about cases can lead to clients who, when things go wrong or where their recovery is not what they expected, feel that they were inadequately advised of the risks of pursuing their case.
The independent views of a third party ATE insurance underwriter can help manage client expectations, and provide a way of easing into a conversation the weakness of a client’s case. Insurers will not only flag up issues of merit, but also proportionality (the cost of running the case versus the likely case value) – which provides lawyers with the perfect opportunity to explore cost-benefit analysis with clients, leading to fewer surprises later down the line. Preparing an accurate budget from the outset can also help the client and firm to come up with a “game plan”, and agree to matters such as settlement figures before the litigation heats up.
ATE providers will consider most cases that the firm deems to have greater than 60% prospects of succeeding. Insurers can help to provide a neutral view on cases where a lawyer may have a slight bias because of their direct interaction with the client.
Furthermore, insurers will expect an accurate estimate of quantum, adverse costs, and the costs to take a case to trial. This enables the markets to assess the proportionality of the case and inherently, the appropriateness of ATE insurance, which can reduce issues associated with a shortfall in recovery.
It is important to stress that ATE insurance should not be considered as simple adverse costs protection – own disbursements and own side lawyers’ fees can also be insured.
Security for Costs
Security for costs can be a particular challenge for impecunious or non-Canadian domiciled plaintiffs and often, a good case can be frustrated by such elevated costs. TheJudge’s ATE insurance products are a cost-efficient answer, giving the opponent – and the court if necessary – comfort that an adverse costs order will be paid despite the plaintiff’s financial standing.
If you would like to discuss how ATE insurance can assist your clients please contact us.
Director of International Development
t: +44 (0)203 882 7489
Email Katie here