Technical Section

There are numerous names for ATE Insurance. 

ATE stands for “After the Event” but some people call it “ATE” or you might have  heard it called “costs protection insurance”, “ATE Legal Expenses” or “ATE Litigation Insurance”.

Whatever name you wish to call it, an ATE policy is an insurance policy that protects a client from having to pay their opponents legal costs if they lose their legal dispute.

In civil litigation the general principle is that the losing party pays all of the legal costs.

The cover under an ATE policy can vary according to what has been agreed. Not all cover is the same. There can be different limits applying to different sections and some risks might be excluded altogether. 

As a general rule however an ATE policy usually provides cover for own disbursements and opponents costs and disbursements.

ATE and BTE insurance product are very similar in that they are both “Legal Expenses” insurance policies providing legal costs cover. 

The fundamental difference between the two products is largely determined by the point at which the policy is purchased.

BTE or “Before the Event” Insurance is generally purchased as an “add-on” to another existing annual policy like a Home or Motor policy. These BTE policies provide cover for some specified types of legal dispute but not all types of legal dispute. An important distinction is that a BTE  policy must be purchased before the event  (giving rise to the legal dispute) has occurred. 

An ATE Insurance policy by contrast is purchased after the event (giving rise to a legal dispute) has occurred. ATE Insurance is usually arranged by Solicitor’s on behalf of their clients for the specific legal dispute they are running.

The premiums are also significantly different. BTE Insurance is sold to many people who will not have a  legal dispute throughout the policy year. The premium collected from all is used to pay for the few cases. 

ATE premiums are calculated differently. The premiums charged (which are considerably higher than BTE) reflect the historical chances and costs of losing the legal dispute.

The policy is for the insured party whether this is the claimant or defendant bringing or defending the legal action. 

Law firms don’t directly benefit financially from ATE Insurance policies. 

The policy is there to cover their client’s, opponents costs and disbursements in their litigation.

The indirect benefit to law firms is that the ATE policy will reimburse the Law firm for disbursements and Court fees in the event their claim is unsuccessful.

Yes. ATE insurance was originally developed to compliment Conditional Fee Agreements (CFA’s) because a CFA removes the liability for the clients own legal costs (if a legal dispute is lost) but does not protect against disbursements or opponents costs.

An ATE policy is designed to pay opponents costs and disbursements and therefore an ATE shuld be routinely purchased in every case where there is a CFA.

It is not however a mandatory requirement for there to be a CFA or “no win no fee” agreement in order for ATE insurers to offer a policy but it does make the proposition more attractive to insurers if solicitor’s have some “skin in the game”. 

You can purchase ATE Insurance for any type of legal dispute where there is any financial risk to the insured client however, the difficulty is whether the terms are affordable to the client.

Sadly, we see meritorious cases on a daily basis that can not be insured simply because it is not commercially viable for the client to do so. 

Why is this?

Put simply ATE premiums like all insurance premiums are calculated according to the risks and sums the policy will have to pay out. 

As an example, lets assume we have 10 similar legal disputes to insure, all with similar sums involved. Each client is suing for £10,000 damages over a breach of contract claim and the chances of winning each case is 60%. 

This would mean, by definition 40% (4 out of the 10 cases) will lose 

Now lets suppose the opponents legal costs in each case are £40,000.

The cost to the ATE Insurer would be £40,0000 for each lost case – a total of £160,000 for all 4. 

This means that if the premium is insured (premium only payable if the case is won) and 60% of the cases do win the ATE Insurer would need to collect a premium of £26,666.00 for each winning case.

(£160,000 ÷ 6 = £26,666)

For the above reasons, cases which fit a similar profile to the above are not suitable for ATE Insurance because the damages in the example of £10,000 are only a fraction of the legal costs.

Yes. ATE is designed to pay for disbursements including court fees, expert witness reports, locus report etc if a legal dispute is lost.

In addition QOCS or “Qualified One Way Costs Shifting” only provides costs protection for opponents costs if you lose your claim however, your client is still liable to pay your opponents costs if you fail to beat a Part 36 offer. 

You should try and purchase an ATE policy as soon as you you are appointed to act by your client.

This is not always possible if you do not have sufficient evidence to establish whether the legal dispute  has good prospects of success however the general rule is that the later you purchase the ATE Insurance the more expensive the premium will be. 

ATE Insurance works on the same principle as all insurance products where “Many pay for the few” meaning “many premiums” pay for the “few” claims. 

In order to achieve this ATE Insurance should be purchased from the outset, on every case. If you do not do so, you are unwittingly making the products un-affordable for your other clients.  

If your firm has signed up to a delegated authority scheme you must obtain a policy within 14 days of your client entering into a CFA.

ATE insurance premiums are the responsibility of the insured client although the Solicitor acting for the client (with the clients consent) usually arranges the ATE policy and undertakes the premium payment on the clients behalf. 

In some limited case types the premium might be recoverable from an opponents (see  Are ATE Premiums Recoverable from Opponents?)

ATE Policy Terms vary. Some ATE premiums are only payable in the event the client wins their case (see self insured premiums) and some premiums are deferred until case settlement (see deferred premiums).

In order to assist clients fund their litigation ATE insurers have developed their products so that the premium does not become immediately payable when the policy is purchased but instead becomes payable at a pre-determined time. 

This is called a “deferred premium”. The terms of the policy or agreement will make it clear when t he premium becomes payable or whether it is deferred.    

Self Insured premiums are another unique development by ATE Insurers and are not found elsewhere.

In basic terms, the premium  only becomes payable if a legal dispute is successful.

In technical terms, the premium is added to the cost of a claim if a legal action loses.

Self Insured premium are often described as a “no win no fee” premiums because the payment term mimic the standard terms of a Conditional Fee Agreement.   

ATE Insurance premiums are generally no longer recoverable from an opponents if you win your case. The LASPO Act which came into effect in April 2013 removed the recover-ability of premiums for most types of litigation.

There are however a few areas where premiums are still recoverable from an opponent:

The two main exceptions are:

• Clinical Negligence – (Part Recovery) where premiums are split into 2 parts with part of the premium remaininf recoverable from the third party opponent. 
• Defamation and Privacy cases

Legally there is no types of legal dispute that cannot be insured. As long as there is an “insurable interest” a legal case case is insurable.  

In reality however, an insurer will not insure a legal case, if, in the insurers opinion a case does not enjoy a good chance of winning i.e prospects of success of 51% or greater.  

In addition, a case would not be insurable by the insurer if it is not commercially viable to do so.

see above  (Can I purchase ATE Insurance for any type of legal dispute?)