Expense risks of entering litigation
- Liability to pay firm of solicitors and barristers.
- Liability to pay disbursements (experts, e-disclose and witness costs).
- Liability to pay other party’s costs if claim unsuccessful.
- Substantial cash flow and financial risk.
Solutions
After the Event Insurance (“ATE”)
- Insurance against costs if case lost.
- Can also include cover for your disbursements.
- Premium can be deferred and contingent upon success i.e. not payable if lose.
- Need to show good prospect of success and good prospect of enforcement.
Conditional Fee Agreement (“CFA”) or Damages Based Agreement (“DBA”)
- On a CFA the law firm charges at discount to hourly rate and receives percentage uplift on fees if claim successful.
- Maximum uplift 100% and only hourly rate without uplift (“basic hourly rate”) recoverable from other party.
- DBA is when solicitors are entitled to a percentage (up to 50%) of damages awarded, if successful.
- Again good prospects of success required and only some law firms will offer.
