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You Can’t be too Careful when Advising Clients About Funding

By David Pipkin, Non-Executive Director

(Estimated reading time: 2 minutes 47 seconds)

Whenever I am discussing Temple’s funding options with lawyers, invariably I ask what their clients need to know to help them make the right decisions. Whilst there is little doubt personal injury clients anticipate some form of conditional fee and ATE insurance package being offered by their lawyer, that is not the case with commercial client’s disputes.

There are a substantial number of commercial lawyers able to offer their clients funding options including ATE insurance, but still many who do not.

So what does a lawyer have to do to remain compliant when having these discussions? The SRA code of conduct is a little vague requiring that lawyers  “…. Give clients information in a way they can understand. You ensure they are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them.”

I am sure some years ago the SRA muttered something about providing more detailed guidance about funding, but nothing has been forthcoming so far.

So if you are one of those lawyers that feels funding is overrated, too expensive or just not worth the hassle – but can you afford to ignore funding options? In any event you consider your client’s case to have strong prospects of success and your very experienced barrister agrees. Even the best of cases can take a turn for the worst.

Here is case study (details have been changed to preserve privacy). A claimant pursued a claim against his former solicitors for negligence in failing to advise him of his funding options, especially the availability of ATE insurance. He had sought a greater share of his late father’s estate. His solicitor and senior counsel had from time to time assured him his claim had strong prospects and that ATE insurance was too costly. No enquiries were made with ATE insurers and the case lost at trial. Adverse costs alone exceed £500,000. Expert evidence from an experienced ATE insurance underwriter supports the view the claim could have been insured at proportionate cost.

The claim was worth many millions of pounds and the ATE insurance premium would have been contingent upon success. I am aware of several other cases where former solicitors are being sued for professional negligence in failing to advise appropriately about funding options (suffice for a few lines in the client care letters).

It seems the stronger the case the lighter the touch regarding funding advice.

 A case with good prospects will invariably get an offer of ATE insurance. It will then be the client’s decision whether to accept the terms or not. I do not consider it a sign of any weakness or uncertainty for a lawyer to actively advise a client to explore funding. I can assure you litigation is a perilous pursuit and many “good cases” fail even with leading counsel providing strong support!

It will be no surprise I advocate a consistent approach to funding advice and especially ATE insurance. I suggest you review the written generic advice you give your clients regarding funding options. There are guides available and I recommend Temple’s Solicitor’s Guide and our Commercial Client’s Guide.

It won’t be long before one of the cases I have referred to above reach trial and I have little doubt we shall be seeing many more such claims soon. Please don’t expose your law firm to the potential of such a claim.

David Pipkin

Non-Executive Director
Read articles by David Pipkin

David Pipkin

David was Director of Temple’s Underwriting Division for 14 years during which time he supported Temple’s coverholders with his exceptional knowledge, expert guidance and friendly countenance.

He is now a Non-Executive member of the board supporting the strategic direction of the company and attending key events and meetings with our customers.

David has spent over 40 years as a Legal Executive specialising in personal injury litigation. Initially, he was a claimant litigator pursuing leading industrial accident and disease cases.

As an Associate at Davies Arnold Cooper for over a decade he managed a team of lawyers and acted for defendants in personal injury and general insurance litigation. In this role, he became involved in the early development of the ATE market, assisting the ABI in their involvement in the Court of Appeal test cases such as Callery v Gray.

As the London representative for FOIL he was involved in the liability insurers’ approach to ATE and worked with the government and judiciary in several key consultations. He was a member of the CILEX National Council for over 15 years and was CILEX President in 1995/6.


Read articles by David Pipkin