We work with a variety of after the event insurers and third party funders to offer a number of different innovative methods to fund litigation. We are happy to discuss any of these options with you.
ATE or after the event insurance is a type of legal expenses insurance policy which provides insurance cover for legal costs incurred in the pursuit or defence of litigation. It is distinguishable from BTE or before the event insurance, which might be included in home insurance policies, as it is only available for purchase after a dispute has arisen.
ATE policies typically cover a client’s own disbursements (court fees, barrister’s fees etc.) and a client’s liability to pay an opponent’s legal costs in the event that the opponent wins.
Before agreeing to provide ATE insurance, an insurer will generally want to see:
- A formal Opinion from a barrister confirming that the claim has good prospects of succeeding;
- Evidence that the premium will be paid, either from the client’s private funds or out of any damages/settlement; and
- A costs estimate to take the claim right through to trial.
There are a number of different ways of paying an ATE premium (noting that this will always be subject to the insurer’s agreement), as follows:
- Staged premiums – Where the premium payable increases as the matter progresses, such that the cost of ATE insurance remains proportionate to the costs incurred in the claim;
- Deferred premium – This premium would only become payable at the conclusion of the case; or
- Contingent premium – This premium would only be payable if the claim is won. If the case is lost, the premium would not be payable.
The ATE premium used to be recoverable from the other side in litigation however, this is no longer the case (specifically, for policies entered into on or after 1 April 2013). As such, a party wishing to take out ATE insurance must bear the cost of the premium themselves.
There are a few exceptions to the general rule that ATE premiums are not capable of recovery from the other side, and are still capable of recovery in insolvency-related proceedings and in publication and privacy proceedings.
However, for the vast majority of commercial or personal disputes, ATE premiums will generally be irrecoverable from the other side.
We will always discuss ATE insurance with you, if applicable to your dispute. We have relationships with a number of brokers to ensure that you achieve the best policy possible, for your circumstances.
A conditional fee agreement (CFA) is an agreement between a client and a solicitor which provides for the solicitor’s fees to be payable only in specified circumstances, generally only if the client wins the claim. It is sometimes known as a “no win no fee” agreement.
A CFA will generally include a success fee, which is expressed as a percentage uplift of fees, in the event the client wins. For example, if a solicitor’s fees are £10,000 (known as base fees) and the percentage uplift under the CFA is 50%, a further 50% of £10,000 would be payable as the success fee element, so £10,000 base fees plus £5,000 success fees, totalling £15,000.
The success fee percentage uplift can be anything up to 100% of the solicitor’s base fees. The success fee balances out the risk which the solicitor is taking in dealing with the claim without getting paid and facing the risk of not getting paid anything if the claim is lost.
CFAs do not normally include disbursements, so while the client will not be required to pay the solicitor’s time fees throughout the claim, the client will still be required to pay for disbursements (court fees, expert fees, barrister’s fees etc.). If the claim is successful, these fees would normally be recoverable from the other side anyway.
It used to be the case that the success fee element of the solicitor’s fees could be recovered from the other side to the litigation. This is no longer the case and means that the success fee must be paid by the client from the damages/settlement awarded.
Not all cases are suitable for our instruction on a CFA basis. We will consider the facts of your individual case to determine whether or not a CFA arrangement is suitable for your claim.
In relation to cases proceeding under a CFA, the client is not liable for the solicitor’s fees unless he wins his claim. However, if he loses his claim, while he is not required to pay any of his own solicitor’s fees, he may still be liable to pay the other side/winner’s costs.
This is where there is a strong interaction between CFAs and ATE insurance.
The client may then wish to take out ATE insurance to insure against his potential liability to pay the other side’s fees, leaving him with as little liability as possible, whether he wins or loses the claim.
We, along with most other law firms, record and charge our time on an hourly rate basis. This means that our charges depend on the amount of time we spend working on your dispute. We charge our time in 6 minute units (1 hour = 10 units).
We will always give you an estimate of the fees likely to be incurred for each stage of your dispute and will keep you updated on the position in relation to our fees, as appropriate.
Fixed Fee for Advice
If appropriate, we may agree to provide advice on a fixed fee basis, for example, where you want advice on the prospects of succeeding with a claim, before formally instructing us to commence court proceedings.
Not all claims will be appropriate for us to provide advice on a fixed fee basis and this will often depend on the complexity of the facts or legal issues at hand. Even if we cannot advise on a fixed fee basis, we will be able to provide you with a fee estimate for providing the advice, in the alternative.
We will be happy to discuss funding arrangements with you, at the outset of your instructions to us.
Third Party Funding
We also work closely with third party funders who are able to loan monies to fund litigation, paying both solicitor’s fees and disbursements in return for a fee.
The third party insurance is often used in conjunction with after the event insurance, this meaning that if the case is unsuccessful, the loan will not have to be repaid as it is self-insured.
Contact any of our solicitors to discuss these options further.