Funding Considerations

1. ATE insurance is relevant wherever "costs follow the event" (i.e. loser pays the winner's costs). This extends beyond court proceedings to arbitration proceedings.
   
   
2. ATE insurance is available for a wide range of cases: personal injury, clinical negligence, professional negligence, contractual disputes, insolvency, defamation and intellectual property. It is also available for group actions and cases that require high limits of indemnity.
   
   
3. Whether a private paying (“pay as you go”) retainer, pure CFA (“no win, no fee”) or discounted CFA (“no win, reduced fee”) is entered into with a client, ATE insurance should be considered.
   
   
4. ATE insurance is relevant whether the firm act for an established corporate client with an annual legal budget or an SME with an occasional, one – off dispute, or a client with no funds.
   
   Example
   

   Your client, an SME, has a contractual dispute with a supplier.
   
   Estimated client’s costs: own costs for proceeding to trial is £60,000, and £20,000 for his own disbursements.
   
   Then, as a rule of thumb, it will be expected that an opponent’s costs will be in the same region as well (i.e. £80,000).
   
   Cover can be obtained for these opponent’s costs (£80,000) and own disbursements (£20,000). Therefore, in this example, cover could be obtained for the £100,000 exposure that has been estimated.

5. ATE insurance (for opponent’s costs and own disbursements) can often be obtained where the premium is paid at the end of the case and where the premium is self insured in the event that the case is, ultimately, unsuccessful. Much depends on the level of cover required.

6. But even if a premium needs to be paid upon a policy being taken out, this premium will, at least, minimise the total exposure to the client. Of course, if the case is successful, the premium will be recoverable from the loser in the dispute.
   
   Let’s go back to the example taken above. If the total exposure is £100,000 but the premium required to lay off that risk is £30,000 plus IPT, a client may very well agree to buy cover.