After the Event Insurance: The New Legal Safety Net
Personal Injury Client Costs and Fees
In Ontario automobile and non-automobile personal injury cases, the costs and fees can be a heavy burden for a client. Generally, lawyers and clients establish a Contingent Fee Agreement (CFA) where a client agrees to pay the lawyer’s costs only if successful. If the case is unsuccessful, a client does not have to pay the lawyer’s costs. However, the client may still have to pay the lawyer’s outstanding disbursements.
Adverse Cost Award
The adverse cost award rule requires that an unsuccessful party pay a portion of the winning party’s disbursements. However, even if a client is successful they may still have to pay a portion of the opposing party’s costs and fees if the opposing party made an offer to settle before trial and the award is less favourable than the settlement offer.
Please see below for detailed explanations of costs and disbursements, the adverse cost award, and settlement offers rule.
What Is After the Event (ATE) Insurance?
After the Event (ATE) insurance is a legal expense Insurance policy now available in Ontario that covers some of the fees and disbursements at the end of a case or settlement. ATE Insurance is one of the most effective ways to protect a client financially after the trial process and provide a safety blanket if unsuccessful. Before deciding to purchase ATE insurance it is important to understand how ATE Insurance works and its implications in the trial process. ATE Insurance benefits can vary widely depending on the policy you purchase, settlement offers, and the outcome of your case.
Common Questions about ATE Insurance
1) What’s in it for the Firm?
We don’t make a profit.
Our only incentive to provide the ATE Insurance option is to protect our clients and provide a safety net if needed.
By providing the ATE Insurance product through a specified broker we are also able to offer a lower premium rate because the product is purchased as a group rate which is offered to all of our eligible clients.
2) What are costs and disbursements?
Costs are defined as a portion of legal fees of one party that the opposing party must pay usually if they are unsuccessful.
Disbursements are other legal expenses such as court fees, travel costs, experts, printing, office expenses, and more.
Generally, an unsuccessful party must pay 60% the costs and disbursements of the opposing party. However, a judge has discretion to compel a party to pay up to 100% of the costs and disbursements depending on each case.
3) Who is our ATE Insurance brokerage?
The Judge is an Insurance brokerage working in the litigation field. The Judge focuses on providing clients with financial protection by covering unsuccessful litigation costs. The goal of The Judge is to encourage affordable access justice.
4) Who is the policy holder?
The plaintiff is usually always the policy holder.
5) How much does ATE Insurance premium cost?
The standard premium rate is $1,350 (not including taxes), which covers $100,000 in costs and disbursements. These rates can vary widely between $25,000 and $250,000. The premiums can reach between $2,500 and $3,500 depending on projected costs of litigation.
Policy terms can vary from each case and insurer.
6) When do you have to pay?
Premiums are deferred until a case concludes.
The premium is only paid if the plaintiff is successful and does not face any adverse cost awards.
7) How does the ATE Insurance premium work?
If you are awarded under $10,000 there is no premium owed. If you lose and the court awards costs against you, the insurance company will cover those costs up to $100,000 and no premium will be charged as well.
8) When can ATE Insurance be purchased?
ATE Insurance is acquired ideally within six months of retaining a law firm. However, it can be purchased later at an increased premium.
9) What does the ATE Insurance policy cover?
A typical policy will be triggered by one of these events:
- You are unsuccessful at trial and are required to pay defence costs and disbursements awarded at trial.
- You are successful but failed to beat a settlement offer by the opposing party.
- If you seek to abandon a claim, disbursements may be covered.
10) What is an offer to settle?
Generally, any party in litigation can make an offer to settle at any time. To ensure that it is recognized by the court as a valid offer to settle it should be made at least seven days before a hearing.
11) How do offers to settle affect costs and disbursements?
There are litigation rules that affect the outcome of costs and disbursements in a case where a settlement offer was rejected. Where an offer to settle is made and the opposing party rejects the offer, the costs and disbursements may be changed depending on the outcome of the trial.
Example: Where the opposing party makes an offer to settle, the offer is not withdrawn, and the plaintiff rejects the offer.
- If you are successful at trial but receive a judgment as favourable or less favourable than the settlement offer the plaintiff rejected, you will generally have to pay 60% of the opposing party’s costs and disbursements from the date the settlement was offered onward. The judge has discretion to compel the claimant to pay a higher percentage of costs and disbursements depending on each case.
- If you are unsuccessful at trial and the opposing party receives a judgment as favourable or less favourable to the settlement offer the plaintiff rejected, the opposing party is entitled to 90% of the costs and disbursements of the plaintiff from the date the offer to settle was made.
It is important to remember that because of the “offer to settle” rule, the plaintiff may be faced with adverse costs despite being successful in a case.
12) How many cases settle?
Approximately 96% of cases settle annually.
13) What does ATE Insurance not cover?
ATE Insurance does not cover the plaintiff’s lawyer legal fees.
Minimize the Financial Risk and Uncertainty of Litigation with ATE Insurance
For our clients, the primary advantage of purchasing ATE insurance is the peace of mind it provides knowing that, regardless of the outcome, potential costs will be covered.
If you have sustained a personal injury at another party’s fault, please contact me and my team of experienced personal injury lawyers for a free consultation.
More on Personal Injury from Roger R. Foisy:
- Understanding Why OHIP Might Receive Part of Your Injury Claim Settlement
- Recognizing the Signs and Symptoms of a Concussion [Infographic]
- How Mild Traumatic Brain Injuries (mTBIs) Affect the Family