Litigation Insurance Explained
Litigation insurance is a way of insuring for litigation costs, for example in the event that the case is lost and the policyholder is made liable for the opponent’s legal costs. This is sometimes known as after the event legal insurance.
There are various types and levels of cover available, as detailed below.
Litigation Insurance: Available Cover
(1) Own Side’s Budget
Own Side’s Budget Litigation Insurance is designed to cover the client’s own litigation budget. This can potentially include both future and historic costs. Under this model, the client finances the litigation or arbitration on a normal fee-paying basis, but takes out insurance to cover some or all of the amount paid. If the case is unsuccessful, the insurance reimburses the client for the insured legal fees and costs incurred.
Insurance structured in this way can sit alongside a third party litigation funding arrangement, or provide a cost-effective alternative for corporate clients with good liquidity that are seeking to manage their litigation budgets.
(2) Adverse Costs / Fee Shifting
Under this model, the policyholder insures against the risk of “adverse costs” – that is to say, their potential liability for the opponent’s legal costs in the event that the case is lost and a costs award is made against the policyholder.
(3) Security for Costs
Where a client is facing potential security for costs applications we can provide insurance solutions. TheJudge has been involved in many of the cases setting precedent case law on this issue. There are a number of potential ways in which security for costs issues can be addressed, including specific financial instruments. Please contact us to discuss your requirements.
After the event legal insurance
TheJudge is the market leader in the placement of litigation and arbitration insurance (also known in the UK as After the Event or ‘ATE’ insurance).
For over 18 years, we have been at the forefront of this highly specialist sector. We have placed more policies and have a larger dedicated team than any other broker in the market.
We have arranged the largest policies ever written and are continually pushing the boundaries of what can be done. By pioneering product developments and introducing new capacity, TheJudge has helped to shape a market that now forms a mandatory part of any advice given by law firms regarding funding legal proceedings in the UK. This has also become a key export product to law firms and their clients around the world.
