By Matthew Pascall, Senior Underwriting Manager
(Estimated reading time: 2 minutes, 29 seconds)
At Temple we think a few minutes spent by in-house counsel getting to know about Litigation/ATE insurance may well reap rewards in the long run. Managing risk is at the heart of the work carried out by most in-house lawyers and Litigation insurance is all about managing risk.
I suspect that any lawyer having to meet the demands and complex needs of their single client, who also happens to be their employer, will not have given much thought to litigation insurance. They may well feel that the solicitors they engage to provide external advice and support can be left to fret about such things and give the appropriate advice.
Businesses avoid litigation for good reason – it’s time consuming, expensive and a distraction. The job of in-house counsel is usually to keep their employer as far away from a courtroom as possible. But sometimes litigation cannot be avoided. A claim has to be pursued or defended.
Once the stage is reached where litigation cannot be avoided, the need to manage the associated risks becomes paramount. Pursuing a good claim always carries a contingent risk of paying adverse costs and the need to write off the cost of disbursements incurred in the course of the litigation.
These are contingent liabilities, but how should these be treated in a set of accounts?
- Litigation insurance offers a company the chance to manage these risks and crystalise the contingent liabilities. Subject to its terms, a litigation insurance policy eliminates the risk of having to pay any adverse costs and being unable to recover own disbursements if a case is lost.
- At a stroke, the contingent liability disappears. The premium, only payable at the conclusion of the case and only if the insured is successful, is easy to calculate. You will always know what you will have to pay and know you won’t have to pay any adverse costs.
For companies that are struggling and might face an application for security for costs, we can provide a solution. Standard litigation insurance policies are generally not accepted as a means of providing security. However, in some cases Temple can strip out from our policies key exclusion clauses by way of an endorsement reducing our scope to refuse a claim. The courts accept policies in this form as security.
Litigation Insurance or ATE insurance?
Is litigation insurance the same as ATE insurance? Traditional legal expenses insurance is often known as Before-the- Event or ‘BTE’ cover. Litigation insurance used by solicitors is commonly known as After-the-Event or ‘ATE’ insurance. The latter is the technically correct term, but your client may better understand ‘litigation insurance’.
Please call our Commercial team on 01483 577877 if you’d like to find out more; do note that our case assessment service is free of charge and without obligation. For more information download our guide to litigation insurance for in house counsel at https://www.temple-legal.co.uk/in-house-counsel/ . Please mention litigation insurance to your external solicitors and counsel and ask them to call us for a discussion about any case in which you become involved.
Barrister Matthew Pascall joined the commercial team at Temple Legal Protection, as Senior Underwriting Manager in November 2017.
Matthew was called to the Bar in 1984 and joined Guildford Chambers two years later. Spending more than 30 years in practice there, he has comprehensive knowledge and experience of the commercial legal sector and is listed in the current Legal 500 as a Tier 1 barrister.
Previously Matthew had been providing ongoing consultancy services to Temple Legal Protection for some time and therefore has prior insight into the company and established productive relationships with our clients. His knowledge of the commercial legal sector and litigation practice is invaluable to the business and our clients, providing specialist experience to lead the commercial litigation insurance team.
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