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After the Event Legal Expenses Insurance (ATE)
ATE policies are commonly used to provide cover against the risk of paying opponent costs in specified litigation or arbitration proceedings.
ATE polices can also be extended to cover own disbursements, own Counsel and some own lawyer fees.
ATE polices can be fortified with an Anti-Avoidance Endorsement (AAE) or Deed of Indemnity (DOI) in order to satisfy a demand by the Defendant for security for costs. It should be noted that different rules and requirements will apply for security for costs depending on the jurisdiction or arbitral forum.
ATE can be used in conjunction with litigation funding or separately depending on case specific requirements.
Work in Progress Insurance
Where the law firm is acting under a CFA or DBA an element of the fees that are at risk can be insured. Where some of the fees are being paid by the client or a litigation funder a proportion of the fees remaining at risk can still be insured. As the risk of loss is that of the law firm, so too must the law firm be the insured entity.
Work in Progress Insurance (WiP) can be arranged on a case by case or portfolio basis albeit cover and pricing varies accordingly.
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Capital Protection Insurance (CPI)
CPI may be purchased to protect capital being invested into funding litigation whether the investing party is a litigation funder or the claimant or a party paying litigation costs on behalf of the claimant.
CPI can be arranged on a case by case or portfolio basis. The pricing and also the cover varies depending on which option is selected. There are a number of markets that will consider CPI risks but not all will write case specific cover.
Arbitral Award Default Insurance (AWDI)
Available for bilateral investment treaty arbitrations in respect of the risk of the state defaulting on payment of any award that may be made by the tribunal.
There are only a very few insurance markets that will consider such risks.
Judgment Preservation Insurance (JPI)
JPI provides cover in respect of an element of an award of damages ordered at first instance where the risk of reduction or entire loss of the award might occur on appeal.
JPI remains available for some cases though it should be noted that the market has contracted and hardened over the last three years due to claim severity and frequency. JPI is a case specific product.
Adverse Judgment Insurance (AJI)
AJI provides a defendant with some protection against damages that may be awarded against it.
AJI like JPI is more difficult to obtain currently but there are markets that will consider offering terms.
Litigation Funding
Large commercial cases will often benefit from having litigation funding as well as ATE and possibly other insurance products. When approaching the litigation funding market it is important to note that this is not a standardised product. Amongst the litigation funders funding appetite, pricing and structuring of deals varies considerably.
Drivers for using litigation funding vary between financial necessity to managing financial results.
It is common for litigation funding to be used alongside ATE to ensure that the client is de-risked. However, navigating the contractual and statutory duties of disclosure needs to be managed carefully, which is also where we can assist.
