Asking the right questions of ATE insurance providers

Posted by Matthew Best, senior underwriting manager at Legal Futures Associate Temple Legal Protection

Best: Beware disguised interest

One of my colleagues once said that he believes that finding the right funding partner at the right time enables you and your client to share risk effectively. I think that this is still so very true, especially if you’ve seen the recent news that two large litigation funders have exited the market.

Understandably, this may have caused unease among solicitors regarding some of the litigation funding and disbursement funding solutions currently in the market.

With that potential unease in mind, here’s the downside to two of those. First, ‘on balance sheet’ lending can be a real financial burden, particularly when a successful case can take years to reach a conclusion.

Then there are medical agencies that allow a deferment – but often only at an additional cost for an agreed term. This is a very costly exercise because, if the case hasn’t settled within the deferment period, you must still fund disbursements until conclusion of the case.

Admittedly quick observations, but ones based on experience. And you’re not reading this because you’ve little else to do, so how about what I think does work? It’s not what you might think, but for those that use it, they agree because it’s robust, it’s transparent and it’s easy to use.

It’s the Consumer Credit Act (CCA) agreement option: full disclosure here – this is the Temple Funding offering.

CCA’s are said to add an additional layer of complication to the discussions with clients. This is a myth. The process is as complicated as you make it. We work with many leading UK law firms who find the process both streamlined and straightforward.

Accrual of interest may also be of concern when it comes to a CCA solution. It doesn’t have to be, and it is important to question this if another provider says their solution is ‘free of interest’ as after-the-event (ATE) insurance premiums can be inflated to enable access to that facility.

To me, this is simply disguised interest. Other providers may charge tapered administration fees at the end of successful cases, which to me is also disguising interest.

That’s not all. Your next question is ‘What other services is my law firm being tied into?’ It could be pagination services, medical agencies and reporting requirements; so be aware before you sign up.

My last question is, ‘Are you actually being offered complete and full delegated authority?’ On this, I can categorically assure you that Temple does, but I can’t speak for all other ATE providers.

To finish, here’s a wish list of what you shouldn’t have to do. Try asking these five questions of ATE insurance providers you’re considering and see how they react (of course do include Temple in that list).

  • I don’t want to have to obtain approval for medical and non-medical disbursements over a certain value;
  • I don’t want to have to obtain authority to issue proceedings (or protective proceedings);
  • I don’t want to have to obtain authority to reject a part 36 offer;
  • I don’t want to be tied in with any service providers (as above);
  • I don’t want to have to obtain approval to continue when disbursements reach £10,000.

To sum up, a successful collaboration with your provider should provide a hassle-free, transparent solution that can go a long way in helping your clients in their quest for access to justice.


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