Kerry Underwood


leave a comment »


All of these matters are dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £50.00 and available from me here or Amazon here.

The issues of After the Event Insurance and Third Party Funding are not dealt with in Lord Justice Jackson’s report and there is no proposal there, or indeed amongst the torrent of Civil Litigation Reforms, to change the law or procedure in relation to either After the Event Insurance or Third Party Funding.

However, spreading Fixed Recoverable Costs to virtually all types of civil litigation where the claim is valued at £100,000 or less should make both After the Event Insurance and Third Party Funding easier to obtain.

This is because insurers love certainty and generally both ATE insurers and Third Party Funders are acting as insurers in relation to adverse costs, as well as the client’s own disbursements.

Costs, both those recoverable and those potentially payable to the other side, rise with each stage of the litigation and therefore are perfectly suited to staged premiums, with the premium rising as each stage is passed.

As part of the fee is calculated as a percentage of damages, the amount of damages directly affects costs recoverability and costs exposure, something which is not true in the open costs regime.

There is nothing to stop the ATE premium being calculated in the same way, that is a fixed core premium depending upon the stage of litigation reached, with an additional premium based on the amount of damages awarded, or the agreed settlement figure.

This introduces certainty for the parties as to costs if they have After the Event Insurance.

Thus a winning Claimant would know exactly what costs it would recover, and what ATE Insurance premium it would have to pay to its own insurers, if say the case settled for £73,000.00 after the Case Management Conference and during the process of Disclosure and Inspection.

The only element of uncertainty there is the fee due to the Claimant’s own solicitor and the Claimant and her or his own solicitor are free to agree whatever they want, but the market is likely to determine that the solicitor will charge Fixed Recoverable Costs plus a fixed percentage of damages, as now happens in virtually all work currently subject to the Fixed Costs Regime.

A losing Claimant with After the Event Insurance will pay nothing as far as adverse costs are concerned, as they will be picked up by the ATE Insurance and generally the ATE Insurance insures its own premium,  as well as other own disbursements, that is the so called Silver Bullet Scheme whereby a losing party does not have to pay its own premium.

In those circumstances the only sum payable by the Claimant would be the fees to its own solicitors, and that is a matter of agreement between them.

I suspect that the market will settle down to a system of No Win Lower Fee Agreements in most types of business litigation, with No Win No Fee Agreements in most private client litigations.

A losing Defendant with ATE Insurance is in the same position, that is that the only payments due will be to the Defendant’s own solicitors and they are free to form any type of agreement.

A winning Defendant will recover fixed costs but will also have to pay its own ATE premium, and, unlike a success Claimant, will have no recovered damages out of which to pay the premium.

Of course the Defendant will have avoided paying any damages and thus will have achieved a saving, but will not necessarily have the cash to pay the premium.

The combination of certainty of costs recovery and exposure, and ATE Insurance, enables solicitors to budget a case for a client with considerable certainty and this should lead to a very significant increase in business, especially from business clients.

I deal with this elsewhere in Marketing and Business Opportunities but a detailed knowledge of how After the Event Insurance works is essential.

There is a fly in this ointment.

I have referred throughout to certainty.

However the existence of four Complexity Bands, with markedly differently costs recovery, and therefore costs exposure, cuts across that certainty.

The problem is that neither the Track nor the Complexity Band will be determined until the judge allocates the matter post-issue, that is obviously well after the date when ATE should be taken out.

It may be that ATE insurers will deal with that by having a core fee that varies depending upon which Complexity Band the case is allocated to.

As we have seen elsewhere the Claimant’s solicitor, in the Letter of Claim, and the Defendant’s solicitor, in the Letter of Response, must state which Track and Band the matter should go into.

In the absence of agreement the matter will be decided by a judge, and if the case is settled pre-issue, and so no allocation has taken place, the judge dealing with costs will determine that matter.

This reinforces the great importance of solicitors addressing at the outset, which Complexity Band the matter should go into.

There are various tensions at play here.

A Claimant who expects to win may want to be in a higher Complexity Band so as to recover more costs, but will then pay a higher ATE premium.

A client who is less confident of winning may want, or rather the ATE insurers may want, a lower Complexity Band so as to minimise the adverse costs risks.

The After the Event Insurance premium remains recoverable in mesothelioma cases, but they will not be subject to Fixed Recovered Costs in any event – See Part 19.

In clinical negligence cases that element of the ATE premium relating to the cost of a liability and causation report remains recoverable but the costs of that report and the costs risk should not change, as it is a disbursement rather than legal costs and thus is not affected by the introduction of Fixed Recoverable Costs in clinical negligence claims.

Thus the only area where recoverability of the ATE premium remains, and which will now be subject to Fixed Recoverable Costs, is defamation and privacy.

Third Party Funding

In so far as Third Party Funders acting as After the Event insurers, all of the above points are relevant.

Third Party Funding generally also covers one’s own client disbursements, as do most After the Event Insurance premiums.

What Third Party Funding does in addition, generally, is to pay the party’s own lawyers a fee if a case is lost, and therefore effectively allows a client to have a no win no fee arrangement in circumstances where the solicitors may be unwilling to enter into such an arrangement, generally due to cash flow, rather than case-risk issues.

The value of Third Party Funding increases with the value of the claim and with the extension of fixed costs to claims up to £100,000.00, and with the £250,000.00 pilot running in the Commercial Court, Third Party Funding should become more readily available.

Some Third Party Funders are now looking at funding the firm across a basket of cases, rather than simply offering a bespoke arrangement in an individual case.


Also see:









Written by kerryunderwood

September 20, 2017 at 11:26 am

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: