Legal Expense Insurance
There are two types of legal expenses insurance: before the
event ("BTE"), and after the event ("ATE").
BTE is usually an additional benefit found in a policy that
covers another risk, such as a home or building policy. The cost is
usually fairly inexpensive and the amount of cover provided is
typically £50,000 or £100,000. Cover will be subject to conditions.
A party to a dispute or potential dispute should find out if he has
BTE cover as soon as possible. Delay may be prejudicial.
ATE is a particularly useful form of legal expenses insurance
for a claimant or defendant with a case that is likely to be
successful. The general position is that a litigant obtains cover
against the risk of losing and having to pay his opponent's costs.
One of the reasons why a market has developed for this kind of
insurance is the general rule in litigation that the loser pays the
winner's costs. As a premium paid for an ATE policy usually forms
part of those costs it is normally recoverable from the losing
party. This is no doubt the reason why many ATE insurers are
prepared to defer payment of a premium until it is recovered. For
this to work the insurer has to be satisfied that his insured's
opponent has the resources to pay the costs. Of course in many
cases the opponent will himself be insured.
We can advise on funding arrangements and we have access to ATE
insurers and third party funders.
The Government has confirmed its intention to implement most of
the recommendations in Lord Justice Jackson's Review of Civil
Litigation Costs including a bar on the recoverability of ATE
insurance premiums. As it is unlikely that the implementation will
be retrospective it would be advisable for any litigant with a good
case to obtain ATE cover without delay.