By Karen Hayes
When it comes to legal matters, it is always wise to consider all potential risks and protect yourself from unexpected costs. After-the-event (ATE) insurance is one such option that could offer you financial protection in the event of a legal dispute. In this blog post, we will delve into the details of ATE insurance, its benefits, and whether it’s something you truly need.
What is After-the-Event Insurance?
After-the-event insurance is a type of legal expenses insurance that you can purchase after an incident has occurred and legal action is being taken. It provides coverage for legal costs, court fees, and other expenses associated with pursuing or defending a legal claim. ATE insurance is typically used to protect individuals from the financial burden of legal proceedings, especially when the outcome is uncertain.
Qualified One-Way Costs Shifting (QOCS)
Prior to the 6th April 2023, if an offer to settle (Part 36 Offer) was made by the Defendant but was not accepted by the Claimant, and at Trial the Claimant failed to beat that offer, then the consequences could be quite serious. For although the Claimant had technically won the case by proving the Defendant was at fault, they would have to pay from their damages the amount of costs incurred by the Defendant since the offer had expired (i.e after 21 days). This could mean all the Claimant’s damages could be lost in paying the legal costs of the Defendant.
Regrettably, since the 6th April, the possible consequences of such a situation have become even worse. Now the Court can award the Defendant’s costs from the Claimant’s damages and also from their costs. This means if you do not have After the Event Insurance to protect you, then you could be left not only with no damages, but also a bill for your Solicitor’s costs if you fail to beat a Part 36 Offer.
It appears that it would be better for a Claimant to lose a claim in its entirety, rather than just failing to beat an offer. This is because with QOCS, if there is no finding of fundamental dishonesty or fraud against the Claimant, if they simply lose the claim, then the Defendant will not be able to recover their costs. Further, under the No Win No Fee Agreement, your solicitor would simply write off their costs as you had not ‘won’.
Benefits of After-the-Event Insurance:
- Financial Protection:
Legal disputes can be expensive, with costs piling up quickly. ATE insurance helps mitigate the financial risk by covering legal fees and other related expenses, giving you peace of mind during a potentially stressful time. This means that if you followed your Solicitor’s advice and rejected a Part 36 Offer and then failed to beat it at trial, the ATE insurer would pay the Defendant’s costs. As such, you would still retain your damages, enabling you to pay a contribution to your legal fees in accordance with the No Win No Fee Agreement.
- Access to Justice:
ATE insurance can help level the playing field, ensuring that individuals or smaller entities can pursue legal action against larger opponents without fear of prohibitive costs.
- Risk Management:
Legal cases can be unpredictable, and outcomes are never guaranteed. ATE insurance safeguards you against the possibility of having to pay your opponent’s legal costs.
- Confidence in Pursuing Claims:
With ATE insurance, you might feel more confident in pursuing a claim or defending yourself in court, knowing that your financial interests are protected.
Do You Really Need After-the-Event Insurance?
While ATE insurance offers significant advantages, it might not be necessary in every situation. Here are some factors to consider when deciding if you need ATE insurance:
- Nature of the Legal Dispute:
Evaluate the complexity and potential costs of your legal case. If it is a straightforward matter with low costs involved, ATE insurance might not be essential.
- Financial Capability:
Assess your ability to cover legal expenses out of pocket. If the potential costs could jeopardise your financial stability, ATE insurance might be a prudent choice.
- Opponent’s Resources:
Consider the financial strength of the opposing party. If they have deep pockets and can afford a prolonged legal battle, ATE insurance can provide a safety net for you.
- Legal Advice:
Consult with Coulthursts to get their professional opinion on whether ATE insurance is recommended for your specific case.
After-the-event insurance can be a valuable tool to protect yourself from unexpected legal costs and provide you with the confidence to pursue a legal claim. While it might not be necessary for every situation, its benefits are worth considering, especially if your case involves significant financial risks. To make an informed decision, carefully evaluate the nature of your legal dispute, your financial circumstances, and seek advice from Coulthursts. We can ensure you have the best After The Event Insurance protection possible to support you with your brain injury claim.