Commercial Disputes: What are my funding options?
26 March 2021
MKB Law have vast experience assisting both businesses and individual clients in successfully resolving commercial disputes and obtaining compensation where appropriate. One of the most common (and sensible) questions we are asked by clients is along the lines of: “what is bringing or defending this case going to cost?”
In this blog we will discuss various options available, including the provision of After the Event (“ATE”) insurance policy, which can offer significant comfort to clients in a range of dispute cases.
Case Funding and Cost Implications
From outset of an instruction, our Dispute Resolution team will seek to provide as clear an indication of likely costs as possible.
If a case proceeds to formal court proceedings, and particularly once it becomes subject to the management of the Commercial or Chancery Judge, it becomes increasing difficult to accurately forecast the costs that may be involved. This is often not simply due to the fees of solicitors and barristers but also due to the need to retain the services of other professionals acting as independent witnesses.
What assistance can MKB Law provide to clients who engage our services to help manage costs?
Alternative Dispute Resolution & Mediation
The expectation that parties will put all their “cards on the table” at an early stage in a legal dispute is enshrined in court rules, and in recent years has fundamentally informed the preparation of various court practice directions, particularly those relating to the Commercial Hub in the High Court. The commercial practice direction, among other things, requires parties to set out their substantial position on a case in correspondence at the outset.
MKB are experienced in making use of pre-proceedings processes, in particular the pre-action protocol for commercial actions, in order to be in a position at the earliest possible opportunity to advise clients on the early merits of their case and the likely sums involved.
Jonathan Jackson, Associate Director, is an accredited mediator and well placed to advise clients on the benefits of mediation as a formal alternative to court proceedings at an early stage.
Insurance Funding Options
Solicitors in Northern Ireland are unable to offer conditional fee arrangements (to take on a case on a “no win no fee” basis). There are also strict champerty and maintenance rules for solicitors in terms of third-party funding. In simple terms, this restricts third-parties from funding litigation on the condition that they will benefit from a successful outcome. Despite this, there are several insurance funding options available for commercial clients:
Private Insurance policies:
Increasingly, clients have existing insurance policies which include legal expenses cover. If such insurance cover is applicable, this may cover fully, or in part, the legal costs associated with a case.
After the Event insurance:
MKB Law have successfully acted for clients in cases where we have obtained the protection of an After the Event (“ATE”) insurance policy. Our Disputes team has forged strong links with reputable providers of this type of insurance cover which can offer significant comfort to clients in a range of cases, including professional negligence and general commercial claims.
ATE insurance is often obtained along the following lines:
the insurer calculates a premium for the insurance policy which will depend on a number of factors, including the type of case and the sums involved;
with a successful outcome the premium is deducted from the compensation;
with an unsuccessful outcome, no premium is payable and the insurer pays all of the opponent’s costs and the outlays incurred by the claimant. Outlays would include experts’ fees and Court fees. The plantiff’s only liability would be for his own solicitor and counsel’s fees.
Any offer of ATE insurance will of course be subject to there being good prospects of success given that by offering a policy the insurer assumes a significant financial risk. The benefits of obtaining such a policy can however be considerable, namely:
The only costs which may not be covered by such a policy are a client’s own legal costs. However, these are the costs which can be anticipated in a much clearer and direct way than a possible costs order in favour of another party following a lengthy litigation battle;
The knowledge that an ATE policy is in place may unnerve an opponent as the merits of the case have obviously been favourably assessed by the insurer;
The requirement to “front” the costs of litigation by engaging expensive expert evidence is mitigated by the prospect of reimbursement for those costs even in the event of an unsuccessful outcome.
For further information, please contact MKB Law’s Dispute Resolution who will be happy to discuss your disputes case and funding options as appropriate.