ATE or Not ATE? That Is The Question

Funding is a major aspect in personal injury and related claims. It has been routine for decades for lawyers to discuss with respective clients, what arrangements are in place covering legal costs.

Have There Been Any Trends Emerging In This Area?

A recent emerging trend in commercial litigation disputes is for lawyers to overlook advising clients on funding. Many lawyers specialising in this space can provide their clients with insurance products such as After the Event Insurance Policies. However, many commercial lawyers decide against offering it to their clients.

Are Lawyers Breaching The Solicitors Code Of Conduct By Not Offering Advice On Funding?

Reviewing the Solicitors Code of Conduct closely lawyers should be providing their clients with information and it should be communicated in an understandable way. This aspect is important because the regulator advises that clients need to be able to consider the:

• information put forward by the respective firm
• how the matter will be handled and
• the options available.

By following this guidance closely, it will allow the client to make an informed choice about the firm they want to represent it in a respective matter.

This Makes Everything Clear, Doesn’t It?

The SRA probably aimed for clarity. However, David Pipkin from the legal insurance provider Temple Legal Protection described this aspect of the Solicitors Code of Conduct as ‘vague’. He says the regulator has not provided any further information on funding.

Easy Peasy Lemon Squeezy?

Some lawyers take instructions in a commercial dispute and decide that the case is an easy victory on the respective facts and evidence. They often overlook any discussions surrounding funding because the case is seemingly overwhelmingly open and shut. However, this complacent attitude is not recommended. The old adage ‘complacency is a disease’ springs to mind. Complacently believing that funding discussions are not worth the hassle or overrated is ill-advised. Lawyers may believe the client will win easily and start counting their winnings. However, David Pipkin from Temple Legal Protection advises that strong cases with reasonable prospects of success can disintegrate.

ATE Insurance? What’s The Worst That Could Happen?

A worrying trend appears to have emerged where lawyers are advising clients that they have concrete cases with good reasonable prospects of success and then dissuading them from obtaining After the Event Insurance policies due to it being ‘too expensive’ in proportion to total claim value. As a result, some lawyers never explore any options for funding with clients, fail to approach potential professional indemnity insurance providers for proportionate insurance protection and no insurance cover is put in position.

Cutting to the next scene, when the seemingly ‘unthinkable’ happens and the apparently ‘strong’ case collapses, the client is defeated in court and the accrued legal costs can be eye-watering. In this situation clients may submit legal proceedings for professional negligence against the respective legal representatives for inadequately advising them on financing options.

Safety First?

Lawyers should be avoiding automatically jumping to conclusions on the prospects of success. Alternatively, they should be prudently advising that success is not guaranteed and thoroughly explore available funding options with clients when instructions are taken. Once the funding options are explored the client can decide if they want to put the insurance provision in place or opt against it. Lawyers should also be compiling detailed attendance notes and correspondence recording decisions and displaying these prominently on the file should a dispute arise.

Lawyers should carefully consider the content of their client care letters especially on funding and assess whether the advice provided reflects the market position on professional indemnity insurance.

ASSESSING FIRMS

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THE ARTICLE WAS WRITTEN USING THE FOLLOWING SOURCES

[1] Pipkin, D – You can’t be too careful when advising clients about funding – Legal Futures - 14 March 2022 - You can't be too careful when advising clients about funding - Legal Futures

[2] Litigation insurance and disbursement funding – temple legal protection - Temple-Legal-Solicitors-Guide.pdf

[3] Grimshaw, Dave et al. – Irwin Mitchell Says Some Solicitors Could Face Claims - Failure To Advise On Legal Cost Insurance Options Could Spark Potential Litigation Claims (irwinmitchell.com)

[4] Solicitors Code of Conduct – Solicitors Regulation Authority