After-the-event insurance is not always required in personal injury compensation claims, and our Solicitors rarely advise you to purchase it. As a claimant, you may have existing ‘before the event’ insurance, so check with your vehicle insurers, house insurers, financial arrangements, and union membership if applicable to see whether you already have ‘legal expenses’ insurance coverage that you may utilize without paying anything.
Is ATE insurance necessary?
Any party in a claim can use ATE Insurance, but the person initiating the claim (known as the ‘claimant’) is most likely to do so. If you have ‘legal indemnity insurance’ in place or already have trade union support, you may not need ATE Insurance. If you have access to either of these, be sure you know how extensive the coverage is and whether it will be sufficient. If it isn’t, it may be worthwhile to purchase ATE Insurance to cover any gaps. But don’t worry, your lawyer will be able to assist you with this.
Your lawyer would normally strive to get your ATE Insurance set up as soon as feasible. If it’s delayed, the insurance provider will need a lot more information from the solicitor before they can certify your coverage. This can be costly, requiring you to pay a larger insurance premium.
How much does ATE insurance cost?
You do not need to be concerned about whether or not you will be able to afford ATE insurance because it is provided free of charge. Taking out an ATE insurance policy does not require any payment up front.
Successful case
The cost of your ATE insurance premium will be deducted from your damages if your claim is successful (compensation award). As a result, there is no cost to pay for your ATE insurance policy up front.
Unsuccessful claim
The insurance coverage is self-insuring in the event of a denied claim. Because an ATE insurance policy is classified as a disbursement, it practically pays for itself, therefore you will not be required to pay anything to obtain one.
What does an ATE policy cover?
Clients are covered by an ATE insurance policy if they are required to pay their opponent’s legal costs as well as their own costs/disbursements as a result of launching a legal action. The premium is paid at the conclusion of a legal action and is determined by the outcome of the case.
How does ATE insurance protect the client?
ATE insurance is a type of litigation insurance that protects the insured against the financial risk of having to pay an opponent’s legal fees if the insured loses their case.
It can cover either the opponent’s costs simply or the opponent’s costs plus a portion of the claimant’s own costs, depending on the policy’s amount and terms of indemnity. The amount of cover available ranges from GBP250k to GBP25m or more, and ATE can include costs paid prior to the start of a policy.
Although ATE is normally exclusively available to claimants, some insurers will cover defendants. It can be obtained prior to the issuance of proceedings or at any time after they have been issued; however, obtaining ATE later in the procedures may result in higher rates and make finding coverage more difficult.
Are ATE insurance premiums recoverable?
The CFA success fee and ATE premium are no longer recoverable from the losing opponent if the case is successful from April 1, 2013, if parties fund their lawsuit through conditional fee agreements (CFAs) and/or after-the-event (ATE) insurance. Parties can still enter into CFAs and get ATE insurance to fund their lawsuits, but they will incur additional fees.
Parties can enter into a CFA with their lawyer, in which the lawyer is paid up to twice his or her standard fee if the lawsuit is won and nothing, or a reduced fee, if the case is lost. The increased price is known as a success fee, and it is capped at 100%.
Parties can also purchase ATE insurance to protect themselves from having to pay the opponent’s fees as well as their own if they lose the case. There are times when ATE policies are available “Premiums that are “deferred and self-insured” mean that the insured party does not have to pay the premium until the end of the case, and does not have to pay it at all if the case is lost in other words, the insurance kicks in to cover both the premium and the adverse costs if the case is lost.
The key element of this system prior to 1 April 2013 was that if the case was won, both the CFA success fee and the ATE premium may be recovered from the opponent. That is no longer the case for CFAs and ATE insurance taken out on or after April 1, 2013, as suggested by Lord Justice Jackson.
Portions 44 and 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), which amend the relevant sections of the Courts and Legal Services Act 1990, were used to effect these amendments.
CFAs and ATE policies signed before April 1, 2013 are still subject to the prior rules. There are measures in place to prevent parties from circumventing the reforms by engaging into a collective CFA before the cut-off date, related to a class of actions rather than a specific claim. If the agreement is a collective CFA, there is an additional obligation that the party get representation or litigation services in connection with the specific claim by April 1, 2013.
The result of the earlier arrangements, as Lord Justice Jackson noted, was that claimants (who are the most common users of such arrangements, though they can be used by both claims and defendants in theory) could litigate “Risk-free” comes at a significant cost to the losing defendants.
- If the claim was lost, they would not be required to pay their lawyer anything under the CFA; they would not be required to pay the opponent’s expenses because they were covered by the ATE insurance; and they would not be required to pay the ATE premium since it had been delayed and self-insured.
- If they won, the defendant would be responsible for their costs, including the CFA success fee and the ATE premium.
According to Lord Justice Jackson, this imposed an unreasonable expenses burden on opposing parties, whose costs responsibility may become outrageously disproportionate if the case went to trial and they lost. The defendant’s expenses responsibility could be up to four times the “usual” costs of a party in the case, requiring them to pay:
- the claimant’s ATE premium, which might be in the range of 90% of the sum covered (for a deferred and self-insured policy).
Lord Justice Jackson believed that this needed to change, and he proposed that CFA success fees and ATE premiums be made non-recoverable. This suggestion was accepted by the government, stating the need to “Reduce the disproportionate costs borne by many firms, individuals, and other organizations (including the NHS) who have been subjected to CFA actions” and restore greater proportionality to civil case costs.
The decision to eliminate recoverability was met with strong opposition, with claimant lawyers contending that the revisions would result in a reduction in access to justice.
In May 2012, the government announced that CFA success fees and ATE insurance premiums would be recoverable in insolvency proceedings until April 2015, based on the assumption that such cases would be rare “bring significant revenue to the taxpayer and other creditors, as well as encourage good business practices” In fact, the exception was in effect until April of 2016. There was also an exception for defamation lawsuits until April 6, 2019.
- Premiums to cover the expense of expert studies on liability or causation in clinical negligence claims in regard to ATE.
As an additional limitation on the amount of success fee that can be collected in personal injury cases, the success fee is capped at 25% of damages (excluding damages for future pecuniary loss). As a result, the lawyer can be paid a success fee of up to 100% of usual fees, limited at 25% of damages.
Two other provisions were enacted to compensate personal injury claimants for the loss of recoverability, assuaging concerns that this would result in a diminution in access to justice:
- a 10% rise in general damages (see “10% increase in general damages”); and a 10% increase in special damages (see “Special damages”).
- For personal injury claims, a change to “qualified one-way costs shifting” (QOCS) (see “Qualified one-way costs shifting (QOCS) for personal injury claims”).
When a claim is pursued with the aid of a CFA and ATE insurance, defendants are no longer exposed to increased expenses responsibility. The revisions have therefore been seen favorably by defendants, while the gain is offset in personal injury instances by the shift to qualified one-way costs shifting (QOCS).
What is qualified one way costs shifting?
From April 1, 2013, “qualified one-way costs shifting” was implemented for personal injury claims. This means that, with few exceptions, defendants will be obliged to pay the costs of successful claimants but will not be able to recover their own costs if they successfully defend the claim.
QOCS does not apply to actions in which the claimant has the benefit of a CFA or ATE insurance policy in place before 1 April 2013 and the success fee / premium is still recoverable.
New Civil Procedure Rules 44.13 through 44.17 were introduced on April 1, 2013, to effectuate the modification.
- On the balance of probabilities, the allegation is found to be true “Fundamentally deceitful.”
- The claim is dismissed because it fails to disclose any reasonable reasons for instituting the actions, or because it is an abuse of process, or because it is likely to obstruct the just disposition of the proceedings.
- The claimant was unable to defeat a defendant’s Part 36 settlement offer. To put it another way, the Part 36 offer system “Because QOCS “trumps” QOCS, a claimant who rejects a defendant’s Part 36 offer but fails to perform better at trial is liable for the defendant’s costs from the end of the relevant offer period. In certain cases, however, the claimant’s duty for the defendant’s costs is limited to the amount of damages and interest recovered by the claimant. In view of these provisions, defendants should make a well-considered Part 36 offer as soon as possible.
In other cases, such as if the claimant has failed on an intermediate application or on some questions at trial, the guidelines do not preclude a victorious claimant being denied all or part of their costs, or being forced to pay the defendant’s costs. The claimant’s liability for any costs orders, however, is limited to the amount of damages and interest recovered.
No, regardless of the claimant’s riches or lack thereof, it applies to all personal injury cases.
Lord Justice Jackson recommended that QOCS be used to mitigate the impact on personal injury claimants of the judgment to eliminate recoverability of CFA success fees and, in particular, ATE insurance premiums (see “Conditional fee agreements (CFAs) / after the event (ATE) insurance”).
Parties have been able to engage into CFAs and take out ATE insurance to fund their action from April 1, 2013, but they must shoulder the additional costs, which has an evident impact on the amount of damages claimants would receive (though in personal injury cases the success fee is subject to a cap of 25 percent of damages, excluding future pecuniary loss).
The use of QOCS was one of a number of initiatives aimed at mitigating this effect. In particular, the purpose of QOCS was to make ATE insurance obsolete for personal injury lawsuits, since the claimant would not be liable for the defendant’s costs if the claim failed. However:
- The fact that the claimant can lose QOCS protection when the defendant makes a Part 36 offer implies that the claimant is possibly back on the hook for costs, though only up to the amount of the claimant’s damages. If ATE coverage is offered for this risk and it is purchased, the premium is not refundable.
- ATE is typically taken out to cover both own disbursements and unfavorable costs. The cost of ATE premiums to cover expert findings on culpability and causation in clinical negligence cases was carved out of the changes by the government, but the cost of ATE coverage for other expenses is not recoverable.
If a commercial party successfully defends a personal injury claim, they must pay the claimant’s costs if the claim is successful, but they will not be able to collect their costs if the claim is unsuccessful (subject to the exceptions referred to above).
However, for repeat defendants, the transition to QOCS is unlikely to have raised their overall expenses in defending lawsuits. The fact that defendants are no longer responsible to pay the success fee and ATE premium in claims that prevail against them is likely to exceed the inability of defendants to recoup costs in claims that fail.
The most important thing for defendants in personal injury cases is to consider making a well-judged Part 36 offer early in the case to retain some costs protection.
Is no win no fee really free?
A No Win No Fee agreement states that you, the claimant, will only be responsible for your solicitor’s fees if your ‘no win no fee’ compensation claim is successful. These agreed-upon costs are often a proportion of the compensation received, and they are deducted from the payout directly. The CFA, or Conditional Fee Agreement, is the agreement that lays out the specifics of the arrangement. This is a written agreement between you and your lawyer that is official and legally binding.
As of April 2013, solicitors can charge a success fee based on a percentage of the damages you recover. Before you sign this agreement, it’s usually a good idea to question the solicitor about their payment conditions and any other data you need to know. Our own rates are really competitive, and we always recommend getting in touch with us to check how we stack up against the competition before signing on the signed line.
What happens if I lose a no win no fee case?
If you lose your case, a No Win No Fee agreement protects you from having to pay your legal bills. This implies that if you lose your lawsuit, you will not have to pay any legal fees.
When we fund your case through a No Win No Fee agreement, we almost always take out an insurance policy called
What is ate in law?
After the Event (ATE) insurance, often known as litigation insurance, is a specialized policy that is placed in place after a legal dispute has developed to cover the costs of the legal action or dispute.
Its main goal is to protect your clients from having to pay the other side’s legal fees if they lose. It also re-pays their own disbursements in those cases.
While ATE insurance is the technically accurate phrase, your clients may be more familiar with the term “Litigation Insurance.” Traditional legal expenses insurance is commonly referred to as ‘BTE’ or ‘Before The Event’ coverage.
- It can be used in a range of legal matters, including clinical negligence cases, commercial conflicts, and personal injury claims.
- Payment of the insurance premium is postponed until the lawsuit is resolved. As a result, only if your client wins their lawsuit will they be responsible for paying it.
- Because the coverage is self-insured, if the customer loses their lawsuit, they do not have to pay the premium.
- Regardless matter the type of retainer you have with your client, coverage is available.
What is a p36 offer?
The Civil Procedure Rules (Part 36) contain a provision ( “CPR”), which aims to persuade disputants to settle their differences without going to trial. If a party rejects an offer made under Part 36 (a), the offer becomes void “If it makes a Part 36 offer”), it risks being held accountable for higher interest and/or costs in the event of a judgment than if no offer was made.