The starting point for the concept of ATE insurance is the general principle that the costs of litigation in England and Wales are paid for by the party who loses the case. The decision whether to embark on a claim – or to defend one – should involve working out the worst-case scenario: losing the claim AND paying a costs order in favour of the successful party. With our ATE insurance products, MyAccess2Justice steps in and tilts the balance in your favour. We can’t do anything to make your case any better – but we can make it easier to fund, and minimize or remove almost completely the ‘worst case scenario’.
The ATE insurer will generally deal with the legal team, rather than their client. Both at the outset, and during the progress of the claim, it will wish to be satisfied that the changing shape of the dispute is not adversely affecting the risk calculations on which it has based the premiums it has specified.
In many instances, no payment is required by the insurer at the outset of the claim, nor does the insurer make interim payments to the legal team. Furthermore, the underwriters make their calculations so that the insurer accepts the risk – if the case is lost – not only that it must pay the insured’s legal costs, together possibly with the winning side’s legal costs as well, but also the very premium for policy itself. If the insured is victorious, however, then the premium is paid out of the award of damages, etc., by the court.
The basic version of ATE insurance involves obtaining a policy that will pay the other side’s costs in the event that the insured is unsuccessful in the litigation. On the next step up in functionality, the policy will also cover the insured’s disbursements: this can be crucial as the cost of a barrister is a disbursement and may be the biggest single cost of all. And finally, the most comprehensive policies will cover the insured’s own legal costs – either in part or in full.
All such policies, almost without exception, are paid out only on the conclusion of the proceedings (which may be an ‘out of court’ settlement, just as much as a final judgment). This means that either there is an agreement for payment of costs to be deferred until the policy pays out, or that the insured is going to have to find the funds to make payment in the interim, effectively reimbursing himself from the proceeds of the policy.
Both the courts and the Ministry of Justice encourage the early settlement of claims. It’s in the best interest of the parties, usually – but even more in the interest of clearing up the court calendar for other cases. Most ATE policies have a parallel goal: the risk (specifically the amount the insurer is liable to pay out in total) increases as the case proceeds; so the insurer seeks to motivate the insured to reach such settlement by arranging the policy so that the premium also increases, appropriately to the risk, as the dispute continues.
