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UKELA London Meeting Substantial Environmental Disputes & Their Funding Matt Little & James Delaney 12 th July 2011. www. thejudge .co.uk. What is ATE?. Legal Expenses Insurance (‘LEI’) Insurance taken out after the event giving rise to a legal dispute has occurred Policy of indemnity - PowerPoint PPT PresentationTRANSCRIPT
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UKELA London Meeting
Substantial Environmental Disputes & Their Funding
Matt Little & James Delaney12th July 2011
What is ATE?• Legal Expenses Insurance (‘LEI’)• Insurance taken out after the event giving rise to a
legal dispute has occurred
• Policy of indemnity – Opponent’s costs (and potentially interlocutory costs orders)
– Own disbursements (incl. Counsel’s fees)
– Own solicitors’ fees (requires risk alignment)
• ATE is not…– Interim financing for own costs
– Credit risk cover
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ATE Insurance Today
• Current market:
• Relatively stable
• Differing Capacities / ‘Footprints’
• Security
• “Do I need to be acting on a CFA?”
• Indemnity parameters?
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Policy Structure• Deferred until conclusion
• Contingent upon success / self-insured
• Stepped / Increasing / Discounted• Cost increases with insurer’s financial risk
• Allows early settlement
• Recoverability
• Tactical considerations (Notice of Funding)
• How much?
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Issues to consider• Searching the markets
– Maximise the chances of securing terms– Recoverability – First mover advantage?– How much cover? (Too much v. ‘top up’)– Timing (Kris Motor Spares Ltd v Fox Williams LLP [2010] EWHC
1008 )
• Defining “success”• Claimant or Defendant?• Multiple policyholders • Unusual cases, non-monetary remedies etc
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Issues to consider (cont.)• Partial Success
• Part 36 risk • Multiple Opponents / Heads of Claim (Offsets?)
• Security for costs• Al-Koronky and another v Time Life Entertainment Group Ltd
and another [2006] EWCA Civ 1123• Michael Phillips Architects Limited v Riklin and another [2010]
EWHC 834 (TCC)
• Premium recoverability– Currently recoverable in England & Wales subject to test of
reasonableness - Access to Justice Act 1999 s.29 [ but Jackson LJ’s Recommendations]
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ExampleCase – Explosion at manufacturing plant. Toxic chemicals released causing
various alleged claims by local businesses/citizens.
Damages claim - £50m
Legal Cost estimates: Adverse costs £5m Own Side Disbursements £2m Own Side Solicitors’ fees £3m
Insurance cover (a): adverse + disbursements = £7m limit of indemnityPremium: 45% of insured sum = £3.15m. NB: Discounts up to 90% for
early settlement
Insurance cover (b): adverse + disbursements + 50% own fees = £8.5m LOIPremium: 45% of insured sum = £3.825m. Discounts up to 90%
Premium only payable if case succeeds. Case loses no premium and insurer indemnifies costs.
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Litigation Buyout Insurance
Key Features • Covers damages and legal defence costs
• Caps Defendant’s liability at certain level
• Insured’s retained element of risk (retention / excess)
• Upfront premium (not ‘contingent’)
• Example: • Defendant in case example facing £60m risk (£50m claim
and £10m costs for both sides if lost) • [‘Win’ = settling for less than £40m inclusive]• LBO excess of £40m with premium of £1.5m• Worst case outcome reduced from £60m to £40m• (Insurer’s risk = £20m with £1.5m premium)
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Third Party Funding • What is it?
– Professional Funder with no prior interest in case– Share of proceeds
• Cost to the client – Multiple of amount invested or % of damages? or commonly a
combination of both– Increasingly competitive – market adjustment occurring
• Ingredients?– Good prospects of success – Substantial (monetary?) value (not necessarily)– Financially stable Defendant
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The Future of ATE?
• MOJ’s Recommendations• ATE insurance premiums no longer to be recovered from
paying party • Abolition of CFA success fees
• Consequences if implemented
• Greater focus on economics i.e. cost to claim value ratio• Increased pressure to ‘shop around’ to ensure client is not
over paying for funding/insurance
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