ATE insurance, also known as litigation insurance or legal expenses insurance, provides protection against the financial exposure of having to pay an opponent’s legal costs if the insured is unsuccessful in their legal proceedings.
Coverage options include to meet either the opponent’s costs only, or the opponent’s costs and an element of the claimant’s own costs, subject to the level and terms of indemnity of the policy. ATE can also include costs incurred before inception of a policy and the amount of cover available ranges from £250k up to £25m or more.
ATE is usually only available to claimants, however some insurers can provide cover for defendants. It can be purchased before proceedings have been issued or at any time after, however purchasing ATE later in proceedings may result in higher premiums and increases the difficulty in finding cover.
ATE transfers the risk exposure of having to pay your opponent’s legal costs and disbursements in the event of an unsuccessful claim, in exchange for a premium which can be deferred and contingent upon a successful outcome, or staged throughout the litigation.
The existence of an ATE policy provides an incentive for an opponent to settle. They will know the insurer conducted a separate analysis of the merits of the case, in addition to the solicitor and counsel and support the claim.
A larger, wealthier defendant cannot simply outspend a claimant to force a settlement. ATE insurance sends the message that the claimant is in the litigation for the duration, having minimised the litigation costs risk.
In addition to ATE insurance, we can help clients obtain non-recourse funding arrangements from Litigation Funders willing to support claimants with their own legal costs and disbursements.
In the event of successful settlement or award at trial, the litigation funder would be entitled to a proportion of the claimant’s damages or a multiple of their investment, however, should the claim be unsuccessful, the funder would lose their investment therefore the financial risk is transferred from the claimant to the funder.
Through working closely with claimants and law firms, we structure and obtain tailored ATE insurance programmes to provide reliable litigation risk transfer options. Speak to us to find out more.
