Glossary of Legal terms

Glossary of legal terms which you may come across whilst visiting TheJudge

• After the event insurance (also known as ATE Insurance, Post Event Insurance, LEI Insurance ): An insurance policy purchased after a dispute has occurred.
 

There are various types of ATE policies offering a range of cover options:

• Own cost cover
This means insurance cover for the solicitor’s own base fees. Own costs cover is only likely to be available in exceptional cases, as insurers prefer either the client or the solicitor to bear an element of the risk in the litigation.


• Own disbursement cover
Insurance cover for the clients own disbursements, for example, Counsel’s fees, expert reports, Court fees etc.


• Adverse cost cover
Insurance cover to indemnify the Insured in respect of the opponents costs in the event the litigation is unsuccessful.


• Before-the-Event Insurance (BTE insurance)
A legal expenses policy purchased before a legal dispute has arisen. Most BTE policies cover litigation involving private individuals (such as personal injury or disputes involving the home) and are sold via car insurance or household insurance. However, policies are available to cover businesses.

ATE Broker: TheJudge is a broker of ATE Insurance and Litigation Funding agreements including Third Party Funding.  Unlike an insurer or tied insurance agent (cover holder) TheJudge is independent and therefore provides completely impartial advice.

ATE Insurer: An insurance company who writes after the event insurance business.  There are a number of insurers who write ATE insurance. TheJudge works with all the leading insurers and so is well placed to liaise with multiple ATE markets on the client’s behalf. Ensure you carry out due diligence as to the security of any ATE insurer with whom you intend to incept a policy with. At TheJudge we can provide guidance (but can make no warranties) as to the security of the insurers.

ATE Premium: The consideration the Insured agrees to pay to obtain the indemnity required.

There are a variety of different types of premium and payment terms. The following represents the most common premium definitions:

• Deferred premium This means that the premium does not need to be paid to the insurer at the outset but rather the premium is payable upon the conclusion of the litigation.
  
 
• Self insured premium This means that the insurance company has agreed to insure the cost of the premium as part of the policy. Therefore, in the event of an unsuccessful outcome the insurance company will either reimburse the client for the cost of the premium (if it was paid at the outset) or will not seek payment for the premium if the case is unsuccessful (if the premium was deferred).
  
  
• Conditional upon success This is similar to the concept of self-insured, although in this instance the insurance company is advising that the insured’s liability to pay a premium only crystallizes in the event of a successful outcome. If the case is unsuccessful, no premium is payable.

• Limit of indemnity The maximum the insurer will pay in the event of a claim under the policy.

• Top-up insurance This is where a policy is required to top up an existing policy of insurance, for example, an Insured may have a Before-the-Event ( BTE insurance ) policy and the indemnity level may have been reached but the case has yet to conclude. In such circumstances the Insured can apply for an ATE Insurance top up policy.

• Insurance Premium Tax (IPT) The amount of tax that is to be applied to the premium, currently 5% of the gross premium payable.

Coverholder:  The term given to an agency that carries out various functions on behalf of an insurer. It is important to note that such companies are not insurance companies and therefore do not have the financial security of an insurer but merely act as agents for insurers.  Accordingly it’s important to ensure any coverholder is fully authorised to act for the insurer and provides clear disclosure to insurers of risks placed on their behalf. You don’t want to be caught in the middle between a dispute between a coverholder and insurer.

Disbursement Funding: The term given to a finance company that loans a client money to pay for their interim disbursements cost in litigation.

Third Party Funding (also known as professional funding): This is distinct from ATE insurance. It’s a method of financing litigation by a third party.  There are strict rules which must be observed with this form of funding to avoid the agreement falling fowl of maintenance and Champerty arguments.