INTRODUCTION TO FUNDING ISSUES
141. The following section deals with funding issues which apply in July
2012. However, a range of radical changes is very likely to be introduced in April 2013. You will need to visit the website and download updated material to ensure that your knowledge is up to date.
142. Every litigant has to have some means of funding their claim. Put another way, all lawyers and medics want to be paid, and they are expensive! To put that into context, the Court publishes rates of payment for solicitors (and others working in solicitor’s firms) in different geographical areas, and at different levels of seniority (known as ‘grades’). At the commencement of your relationship with the solicitor, he will inform you in writing of the rates of payment they charge.
143. In very broad terms there are presently two main methods of funding a claim. First, there is ‘Before the Event’ insurance (‘BTE’), the ‘event’ being your accident. This is a fund of money available to you to pay the costs of your own lawyers, and the defendant’s lawyers (if you lose the case). It is also known as ‘legal expense insurance’ (‘LEI’).
144. Second, there is a ‘no win–no fee’ agreement, also known as a Conditional Fee Agreement (‘CFA’), the ‘condition’ being ‘success’ of your claim. The CFA is coupled with insurance (called ‘After the Event’ (‘ATE’) insurance) which is intended to pay the defendant’s costs if your claim is not successful. 145. Both types of cover will have their own specific terms (within a ‘policy’
document), and both will have financial limits.
BTE INSURANCE IN MORE DETAIL
146. BTE cover is legal cover often provided by your household or motor insurance. Typically, BTE cover will have a limit of £50,000, which is likely to be adequate for a moderate sized claims. You will have paid the ‘premium’ for your BTE cover as a part of the premium for your motor/home policy.
147. As far as the fault/liability side of the claim is concerned, the insurer will usually continue to indemnify (i.e. ‘cover’) your legal and expert costs, and the defendant’s costs, as long as a barrister (or sometimes a solicitor) certifies the chances of winning are reasonable (sometimes this might be “over 51%”, or “over 60%”, depending on the policy, and the figure may differ for the ‘liability’ and ‘valuation’ parts of the claim).
148. As far as the valuation of your claim is concerned (or ‘quantum’ as lawyers call it), the BTE insurer usually continues to fund the claim until the defendant makes an offer which you are unlikely to ‘beat’ at a trial. Once again, it is usually your solicitor or barrister who advises the insurer of the chances of beating any offer, as the claim proceeds. This is very important, and is dealt with in section 22.
ATE INSURANCE
149. ATE is an insurance policy purchased after the accident to provide ‘cover’ for your opponent’s costs and (often) your own side’s out of pocket expenses, called ‘disbursements’, such as the cost of expert’s reports, paying for Court Fees, and gathering medical records. Providing you ‘win’ your claim (i.e. you settle for a higher sum than the defendant’s best previous offer, or at trial beat the best offer) the ATE insurance will not be called upon.
150. Most solicitors will help you find a suitable policy. The premiums differ depending on the merits of the claim (a rear-end traffic accident is likely to cost a lot less than a complicated workplace claim) and the stage your case has reached when you take out the policy.
151. ATE providers generally ‘defer’ the payment of the premium until the claim has finished, but in actual fact do not ever recover the premium from you if your claim is unsuccessful. In almost all ‘winning cases’, you will be able to recover the insurance premium from the defendant, when the costs of the case are being decided or settled at the end of the case, providing it was at a reasonable market level. The radical changes proposed by the Government, which are likely to come into force in April 2013, will have a very marked effect upon every aspect of funding for injury claims. You must download free updates dealing with these issues from the website.
152. Once again, the lawyers have a duty to keep the insurer informed of the merits of your claim as the evidence develops, and of any offers to settle which are received.
BTE AND ATE TOGETHER
153. There are situations in which both types of insurance are combined. This is often in a substantial claim, where the costs are clearly going to exceed the limit of the BTE cover. In that case, your solicitor will find additional, or ‘top-up’ ATE cover.
FINAL WORD ON FUNDING
154. Before BTE, and CFA’s with ATE, litigants often had to fund a claim themselves, with their savings, a re-mortgage of their home, and the like. That would create a pressure all of its own when an offer was received which might expose the litigant to pay months or years of the defendant’s costs personally. But in that situation, the client’s decision would have been the final decision.
155. In the world of BTE insurance, and CFA’s with ATE insurance, the insurer can decide to withdraw their financial ‘cover’ if your lawyers do not persuade them that it is reasonable for the claim to continue. Ultimately they cannot stop you from continuing the claim, but if you do so, then from that time onwards you will be exposed to the future costs which to that point were covered by the insurance. That is another critical reason why you must know and trust your representatives, and they must have prepared and presented your claim with professionalism.
156. Remember, you must keep an eye on the website to keep abreast of the radical changes in funding arrangements which are likely to come into effect in April 2013.