An ATE Policy or After the Event policy is a special sort of insurance policy that you only take out, or incept after you have had an "event" that many lead to a legal dispute.
There are many types of ATE policy in the market, and your lawyer must be careful to ensure they take out the right policy for your needs.
After The Event Insurance (ATE Insurance) is insurance which covers the legal costs and expenses involved in litigation.
ATE can be used in many types of litigation by either a claimant or the defendant, although in practice ATE Insurance is mostly used by claimants. The ATE Insurance cover is normally arranged and bought by solicitors on behalf of their clients.
The After the Event Insurance policies that we can arrange are available to claimants and defendants of legal disputes. Although many ATE policies are normally only available for personal injury claims, we can also offer After the Event Insurance for commercial litigation.
What does ATE Insurance Cover?
After The Event Insurance policies normally cover the legal costs which a Claimant must pay to a defendant when a claim is unsuccessful – when the claim is either lost at trial, or abandoned/settled after the defendant has incurred costs which the claimant is liable to pay.
Our ATE policies can cover not only those adverse legal costs, but also the disbursements which their solicitors have incurred in pursuing their legal claim – such as the sums they have paid out on the claimant's behalf, expert reports, Court fees and Counsel’s fees to name a few.
When Should After The Event Insurance be Purchased?
ATE Insurance is purchased after an incident (“The Event”) has taken place, but normally before any significant legal costs or disbursements are incurred, so most ATE Insurance policies are incurred when a solicitor begins a claim, although for commercial ATE, policies are usually taken out just before the issue of proceedings.
The overall concept of an ATE Insurance policy is that it will protect the claimant against costs risks right from the outset - if a claim is insured at a late stage (as with most insurance policies) the costs and disbursements which occurred before the date of the After the Event Insurance policy may not be covered, although some ATE policies will backdate cover to include those costs already incurred.
How Time Consuming is it to Administer After The Event Insurance Products?
A number of ATE insurance policies can involve solicitors with some considerable administration to do. This has largely been resolved with firms using ATE schemes to write their cases on a delegated authority basis, especially with PI and clinical negligence claims.
Commercial disputes however, are most always assessed by the ATE insurer before cover is granted.
When ATE insurance was still being developed, defendants argued that a claimant should not purchase an ATE policy until Court Proceedings were started (because it is only from that point onwards that a claimant becomes liable to pay the other side’s costs).
The Supreme Court in (Callery v Gray) disagreed however, and confirmed that it was entirely reasonable to purchase all After the Event insurance right at the beginning of a case.
It acknowledged that when a case first started there was only a very small risk that costs might eventually be awarded against a claimant, but it nevertheless affirmed the insurance principle that the many low risks pay for the large risks which very occasionally occur.
Does it Become Riskier and Potentially More Expensive to Take out ATE Insurance Late in the Process?
Despite the Callery ruling, an informal practice has grown up of solicitors purchasing their client’s ATE Insurance policy only at a later stage - generally when Court proceedings are issued or sometimes even later - once it is apparent that the claim is becoming complex or risky.
The Courts have confirmed that it is permissible to purchase After the Event Insurance late in the day. However, the general disadvantage of insuring late is that a high level of costs will have been incurred by this time, and the risks of losing are considerable, so the ATE insurer’s vetting procedure is likely to be extremely rigorous and the After the Event Insurance premium will be very high in comparison to what is normally a fixed standard premium if the ATE Insurance policy is purchased at the outset.
The difficulty will lie firstly in convincing the insurer that the claim is still likely to succeed, and secondly in convincing your client (who has to pay the ATE Insurance premium) who will argue that it would have been much cheaper if you had taken out the After the Event Insurance policy at the outset!