Is ATE Insurance Necessary in a Personal Injury Claim?
What is ATE Insurance?
After the Event Insurance is used by many Claimant law firms in England and Wales and is also known as Legal Expense Insurance. It is a type of policy that provides the Claimant with legal protection against paying the Defendant’s legal costs in the event their compensation claim is unsuccessful. After the Event ATE insurance is usually offered in no win, no fee claims and is purchased by the Claimant at the start of the claim but is only payable if the claim is successful and paid at the end of legal action. There are many types of Legal Expenses Insurance which provide protection for Claimants in disputes such as property, employment, personal injury or contracts for goods and services.
How Much Does ATE Insurance cost?
The cost of an ATE Insurance premium depends on the type of case being pursued, as well as the prospects of success for the case and when the policy is purchased. The cost of the cover is usually only payable if the claim is successful and most law firms will deduct the cost from the Claimant’s compensation on completion of the case.
What Costs are Covered by ATE Insurance?
In many types of claims, Claimants can be held liable to pay the costs incurred by the Defendant in the event that the claim is unsuccessful. The types of costs that ATE insurance covers include the disbursements incurred by both the Defendant and Claimant Solicitors including Court fees, Counsel’s fees, medical reports etc.
Is ATE Insurance Necessary if QOCS Applies?
In Personal Injury claims which commenced before April 2013, the Claimant’s Solicitors could claim the costs for their ATE Insurance and their success fee from the Defendants in the event that their claim was successful. If a claim was unsuccessful, defendant’s costs were paid by the ATE Insurer.
After 1st April 2013, Qualified One-Way Costs Shifting (QOCS) was introduced for all Personal Injury claims. Introduction of QOCS means that a successful Claimant will be able to enforce their costs against the Defendant however, a successful Defendant will be unable to claim costs against the Claimant in most cases.
Following the changes made in April 2013, the Claimant in a Conditional Fee Agreement claim is now responsible for covering the costs of the ATE Insurance and the success fee. The success fee is now capped at 25% of the damages awarded excluding damages for future loss and care and is usually deducted from the Claimant’s damages when the case has settled.
QOCS was introduced to protect the Claimant from having to pay the Defendant’s costs in an unsuccessful claim. If this is the case, then why are ATE Insurance policies still taken out for personal injury claims?
Why is it Prudent to Purchase ATE Insurance Products in a Personal Injury Claim?
Unfortunately, there are some circumstances where the Claimant may end up paying the other side’s costs, which is why taking out ATE insurance is always a good idea when pursuing a personal injury claim. An ATE policy would usually cover the costs in the following circumstances:
- If a Defendant makes a Part 36 offer and the Claimant fails to beat the offer, they risk having to pay the Defendant’s costs up to the level of damages recovered.
- If there are disbursements on a claim such as the fees for medical reports, and the claim fails, the cost of the disbursements will not be recoverable from the Defendants.
Are There Circumstances Where an ATE Provider Can Refuse to Pay Out?
Many LEI agreements are subject to extensive and onerous clauses. An assessment of costs is usually carried out by an ATE provider and whilst the assessment is usually in the Claimant’s favour, there are circumstances when the provider can refuse to pay the costs and disbursements in a claim. If a claim is unlikely to succeed, it is unlikely that a Legal Expenses Insurer would agree to fund the case. If a case which has been taken on by a Claimant Solicitor with prospects of success of less than 51%, fails, any disbursements on the case will not be covered by the ATE Insurer. The LEI may also refuse to pay out in cases with any element of fundamental dishonesty, misrepresentation or fraud, as well as if the claim has been handled poorly.
How can we Help?
ATE Premiums remain recoverable in inter-partes disputes in clinical negligence cases, and thus it is crucial that you obtain expert Costs Draftsman input to ensure any premium is recovered in full.
LPS can provide an impartial service in drafting your Bills of Costs and negotiating this with either a paying party of the LEI provider. We will ensure that the best result possible is achieved and that any outcome is in line with a reasonable and comparable detailed assessment determination. We will only charge on a % basis of the profit costs recovered, and often our charges are recoverable from the LEI provider.
To find out more on how we can help with LEI Claims, have a look at our website. Our Costs Director, Robert Collington, can be contacted via email on robert.collington@legalpracticesupport.co.uk or by telephone on 01204 930234. You can also get in touch with us via the Contact Page on our website.
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Precedent H Costs Budgets – Frequently Asked Questions
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What is a Precedent H Cost Budget?
A legal costs budget is often referred to as a Precedent H. A costs budget is used at the outset of litigation and outlines the details the costs that the receiving party expects to recover on conclusion, and also outlines where time and efforts should be focused during the course of litigation.
Which Type of Case Requires a Precedent H to be Filed?
A Precedent H is required in all Multi-Track cases. A Costs Budget is not required in any minor claim, claims which are valued in excess of £10,000,000 or in a claim where the Court has decided that a Budget is not required.
What should a Precedent H Include?
A Precedent H costs budget should include the following:
- Your base costs incurred to date
- The future costs to be incurred for the entirety of the case up to and including Trial
- Anticipated costs should only account for what is reasonably foreseeable, and is catered for in any draft directions and the Directions Questionnaire. The Budget cannot account for every possible eventuality in the litigation.
Additional liabilities such as the success fee or ATE premiums should not be included in the costs budget, neither should VAT. Costs for the Precedent H Budget and the Costs Management process do not form part of the main figures, but can be located in the bottom right of the front sheet of the Budget as the respective 1% and 2% figures.
In addition, the costs of interim applications are generally not included (for instance for varied directions), as these can be claimed outside the scope of a Costs Budget on conclusion of the case.
Which CPR Provisions Apply to Precedent H Budgets?
Practice Direction 3E sets out the rules for costs management. It is worth noting the recent changes to Paragraph 7.4 of the Practice Direction which you can read more about in our recent article to find out how the changes can impact on your cost budgets.
Are There Any Deadlines for Filing a Costs Budget?
There is a strict deadline for filing the Precedent H which must be met or the penalties can be severe, reducing the chance to recover legal costs from the other side. Costs Budgets must be filed alongside the Directions Questionnaire if the value of the claim is less than £50,000. If the claim value exceeds £50,000, the Costs Budget must be filed 21 days before the first Costs and Case Management Conference (CCMC). We would always recommend that the Precedent H is filed with the Directions Questionnaire to avoid the likelihood of any default arising.
How do I Prepare a Precedent H Costs Budget?
Guidance notes for preparing a Precedent H can be found here. Our Costs Draftsman service can also help with preparation of your bill of costs.
What Happens if I Don’t File a Costs Budget?
If you do not file a Costs Budget, you will be limited to recovering Court fees only. You can make an application for Relief from Sanctions however; this must be done urgently on realisation of any default, or in the event any party raises an issue.
Can a Precedent H be Amended?
A Precedent H can be amended. You must serve the amended budget on the other side to be agreed. If a Costs Management Order has not yet been made, then parties will simply engage in discussions on the updated Budget, or the Budget will be set at the Costs Case Management Conference. If a Costs Management Order has been made, an application should be made to the Court for a revised budget if the other side do not agree with the amended Costs Budget.
Can I Deviate from a Costs Budget?
If you have not updated your Precedent H Budget before the end of the case, it is possible that there will be be a considerable discrepancy between incurred costs shown in the Bill of Costs and the Costs Budget. This can be due to the passage of time that has passed between the Cost Budget preparation and any CCMC.
If your Budget is insufficient on conclusion, you will need to demonstrate a ‘good reason’ retrospectively to deviate from the Budget. But what exactly is a good reason to deviate from the costs budget? This is quite an ambiguous issue and usually a high threshold to overcome. In order to be successful in deviating from the Precedent H, you must demonstrate the following:
- When the Budget was prepared, the change in circumstances could not have been foreseen.
- Any efforts which have been made to amend the Cost Budget following the change in circumstances.
How can we Help?
The Legal Practice Support team are always happy to help with any budgeting issues, and the author can be contacted via email at stacey@legalpracticesupport.co.uk. If you would like to find out more about best practice in preparing your cost budget, please feel free to view the section on our website for further guidance.
Our Costs Director, Robert Collington, can be contacted via email on robert.collington@legalpracticesupport.co.uk or by telephone on 01204 930234. You can also get in touch with us via the Contact Page on our website.
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Form N260: Statements of Costs
The 104th Update of the CPR changed the wording of Practice Direction 51X and has brought about a two year pilot scheme from 1st April 2019 for a new style N260 Statement of costs . In the new style statement of costs, there are two new versions, the N260(a) and the N260(b). The use of the new style statement of costs is not mandatory during the two-year pilot scheme however, use of the new formats will become compulsory after 31st March 2021 if the pilot is successful.
What are the Differences Between Forms N260 A and N260 B?
The key difference between N260 A and B is that, the former is a version which should be used on interim applications in summary assessments of costs. N260 B is for use at Trial. Both forms follow a similar format to a traditional form of paper bill.
Form N260 A is used to include information on hourly rates for items such as:
- time spent/attendances on the client
- counsel
- the opponent
- “others” such as travel, documents and The Court
Form N260 B is similar; however, the profit costs should now be separated into the various phases of a Cost Budget. These phases include:
- Pre-action work
- Issue/Statements of Case
- Case Management Conference
- Witness Statements
- Disclosure
- Expert Reports
- PTR
- Trial Preparation
- Trial
- Alternative Dispute Resolution
Counsels fees and other disbursements are also categorised. There is also a documents schedule which shows activity time as well as the dates when work was undertaken.
How are the New Forms Different from the Original Form N260?
The new N260 forms can be used in paper or electronic format however, if the electronic format is used, a paper copy must also be filed and served. Under paragraph 5 of Practice Direction 51X, the documents schedule can be:
“… created from electronic time records by filtering the time that is recovered under the activity described in Schedule 2 to PD 47 as”10-Plan, Prepare, Draft, Review”. This may then be sorted and presented first by grade of fee earner and then chronologically.”
There is also a prerequisite when using Form N260 B, that a Precedent Q form must also be filed and served simultaneously. A Precedent Q Form provides the breakdown of costs claimed in each phase of the proceedings.
Could the New N260 Forms Prove Problematic?
The main issue that solicitors may face when using the new N260 forms is that they may take a considerably more time to complete than the original N260, even if the firm’s time recording system allows parts of the new forms to be created from electronic time records. The costs incurred in completing the form can however, be recovered inter-partes if the interim application or trial is successful. It is therefore extremely beneficial to instruct your Costs Draftsman to prepare the new form N260, to ensure the maximum recovery of your costs, and also to ensure that the document is ultimately aligned with any Bill of Costs subsequently produced for assessment.
Can Legal Practice Support Help?
If you would like to find out more about best practice in preparing your Bills of Costs, we would invite readers to view this section on our website for further guidance. The Legal Practice Support team are always happy to help with any budgeting issues, and the author can be contacted via email at stacey@legalpracticesupport.co.uk
Our Costs Director, Robert Collington, can be contacted via email on robert.collington@legalpracticesupport.co.uk or by telephone on 01204 930234.
In addition, if you would like any information on how your Proclaim system can be developed to assist with the new electronic bill of costs, get in touch with our Head Proclaim Developer, James Denby, via e-mail on james.denby@legalpracticesupport.co.uk
You can also get in touch with us via the Contact Page on our website.
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