Act now before the rules on After the Event Litigation Insurance change!

February 27, 2013

 

An After-the-Event insurance policy insures against the risk of having to pay the other side's legal costs.  The premium for a policy taken out and notified to the other side on or before 28 March 2013 can be recovered from the other side, if the insured party is successful in the proceedings.  However, from 1 April 2013, premiums will no longer be recoverable and will have to be funded by the insured party itself.  

What is After the Event insurance?
In English litigation, the general rule is that the losing party pays the winner's legal costs.

An After the Event ("ATE") policy provides insurance against the risks of losing. The policy covers your opponent's costs and sometimes can also cover your own disbursements (such as your barrister's fees).

But what about the premium?
The premium is generally not payable up front, but is deferred pending the outcome of the litigation.

If you lose your case, the premium is insured under the ATE policy, so you do not have to pay it.

If you win, the premium becomes payable. Under the current law, the premium can be recovered from your opponent as part of your legal costs.

However, with effect from 1 April 2013, that will change and the premium will no longer be recoverable from your opponent, which means that you will have to pay it. ATE premiums tend to be at least 50% of the sum insured, so funding the premium could be very expensive.

Next steps?
There is still time to apply for and obtain ATE insurance before the deadline. The new rules about recoverability of ATE premiums are not retrospective, so provided the ATE policy is in place and notified to the other party on or before Thursday 28 March 2013, the premium can still be recovered from your opponent.

However, we will need up to four weeks in which to apply for and obtain an insurance policy, so if you have a claim, or think you may have a claim, but have not yet decided whether to pursue it, you need to take that decision in the next few days.

How we can help
If you would like to consult us on any claims you are thinking of bringing to see whether they are suitable for ATE insurance, please contact Gavin Foggo (gfoggo@foxwilliams.com or 020 7614 2543), Tom Custance (tcustance@foxwilliams.com or 020 7614 2543), or Peter Ashford (pashford@foxwilliams.com or 020 7614 2596).

 

 

 

What is After the Event insurance?
In English litigation, the general rule is that the losing party pays the winner's legal costs.
 
An After the Event ("ATE") policy provides insurance against the risks of losing. The policy covers your opponent's costs and sometimes can also cover your own disbursements (such as your barrister's fees).
 
But what about the premium?
The premium is generally not payable up front, but is deferred pending the outcome of the litigation.
 
If you lose your case, the premium is insured under the ATE policy, so you do not have to pay it.
 
If you win, the premium becomes payable. Under the current law, the premium can be recovered from your opponent as part of your legal costs.
 
However, with effect from 1 April 2013, that will change and the premium will no longer be recoverable from your opponent, which means that you will have to pay it. ATE premiums tend to be at least 50% of the sum insured, so funding the premium could be very expensive.
 
Next steps?
There is still time to apply for and obtain ATE insurance before the deadline. The new rules about recoverability of ATE premiums are not retrospective, so provided the ATE policy is in place and notified to the other party on or before Thursday 28 March 2013, the premium can still be recovered from your opponent. 
 
However, we will need up to four weeks in which to apply for and obtain an insurance policy, so if you have a claim, or think you may have a claim, but have not yet decided whether to pursue it, you need to take that decision in the next few days.
 
How we can help
If you would like to consult us on any claims you are thinking of bringing to see whether they are suitable for ATE insurance, please contact Gavin Foggo (gfoggo@foxwilliams.com or 020 7614 2543), Tom Custance (tcustance@foxwilliams.com or 020 7614 2543), or Peter Ashford (pashford@foxwilliams.com or 020 7614 2596).
 

 

 


Related pages:

Employment Litigation more

Litigation more

Litigation for Professional Practices more

Litigation, Arbitration and Alternative Dispute Resolution more

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Gavin Foggo
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Direct dial: +44 (0)20 7614 2543
gfoggo@foxwilliams.com

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Tom Custance
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Direct dial: +44 (0)20 7614 2508
tcustance@foxwilliams.com

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Peter Ashford
Partner
Direct dial: +44 (0)20 7614 2596
pashford@foxwilliams.com

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