A successful settlement negotiation or end of trial means that the successful party is entitled to claim a part or all of the costs it has incurred over the course of the trial period. As the defending party, it is very important to be aware if the claimed costs are recoverable disbursements or costs that the defending party is legally required to pay.
There is a prescribed list of compensable disbursements set out in the Rules of Civil Procedure Tariff A. This may include long term disability lawyer fees. The court is given power to consider items not part of the list to be recoverable depending on the conditions of the case. One good example is the interest on loans incurred from paying legal fees for the purpose of proceeding the case. Another example is the premiums payable for the purchase of adverse costs protection insurance or trial insurance.
Trial Insurance Defined
As legal counsel, it is crucial that you inform your client of all possible costs that he or she may incur during the litigation. Apart from the initial claim, there might be additional amounts carried over due to the increased complications of the case. In line with this, you need to provide advice on how the client can cover the costs. One of which is by getting an adverse cost insurance or commonly known as trial insurance.
Trial insurance is a regulated expense of legal nature that a client can attain for personal injury litigation. Long Term Disability lawyers need to advice their clients on the presence of this option so that they can make an informed decision on whether to get coverage for a possible adverse case outcome. Moving forward, trial insurance will be referred to as ATE or after-the-event insurance.
What is covered by ATE Insurance?
It should be emphasized that the lawyer or law firm is the policy holder for trial insurance. The amount covers adverse costs including interim costs owed to the defending party and the client’s disbursements from unsuccessful claims. The coverage can start from $15,000 and can go up to $300,000. The amount is calculated based on the estimated exposures of file-specific circumstances and varied cost jurisdictions.
It is important to note for an Insurance Lawyer in Toronto that the insurance also provides coverage for abandoned, discontinued and dismissed files. Trial loss coverage is also standard.
Related Costs for Application
Getting a trial insurance does not have initial fees. The terms are set out at the start, but the premiums are only payable when a successful resolution is on file for a specific case. It may cover costs such as Long Term Disability Lawyer retainer fees so the payable premiums are expected to rise together with the length of the trial.
Reporting for the purpose of claims are not obligatory. There is no need to report disbursement expenditures, settlement offers and other developments. All the insurance provider needs is the final verdict and the final amount.
How to Properly Advise Clients Regarding ATE Insurance
This type of insurance is fairly new to the Canadian legal market and is still largely debated in some states regarding its effect on the country’s litigation policies. However, it should be noted that it has become a standard of care for clients and lawyers will be gravely penalized for negligence of duty if they fail to inform the client about the presence of such insurance.
In order to ensure that your client is well informed:
- Discuss all policy terms and possible risks to your client. Relevant information should be relayed to the client by the Long Term Disability lawyer Toronto and would be better if gone through in detail at a personal meeting. You should include the connection between you as the legal counsel and the provider of the insurance. Keep in mind that due to the interconnection of the contract policy, you will need to report to the provider apart from the reporting you make to the client. Collaboration is very important in this kind of agreement because there are not many laws that ensure that the insurance provider will give a guaranteed payout. Whether or not the provider is a licensed insurer or an unregulated institutions, the payout still greatly depends on the company’s own discretion. Nevertheless, it is good to note that having trial insurance gives the client peace of mind in terms of incurring additional trial costs.
- Determine a reasonable coverage. A case outcome can be fickle. An estimated $50,000 damage can go up to $200,000 if the worst case scenario applies. A Long Term Disability lawyer should communicate to the client a reasonable amount which will be the basis for the ATE insurance coverage. If the coverage is only $100,000 and the costs award is $150,000, the client will be left to pay the remaining debt from his pocket. To avoid problems, make sure to assist your client during insurance purchase so that a reasonable coverage amount is in place.
- Stray away from obvious conflicts of interest scenarios. During the course of the trial, there might be a situation in which the coverage of the trial insurance covers the legal counsel’s fees and none of the other disbursements. If the winning party requests for a settlement wherein your client doesn’t have to pay additional fees but the ones already stipulated, you might enter into a scenario wherein your client will be at a disadvantage if you accept the request. This is because once the claim is settled, the provider will pay your fees while the client is left to pay for the rest. After all, trial insurance is only payable if a trial verdict is passed, and not during the negotiation stage. It is in such cases that the Disability Lawyer trial insurance will give the client losses, while the lawyer stands to gain.
The importance and role of trial insurance in the Canadian litigation landscape is still vague. However, don’t let your client go through the trial unaware. Provide them with all the options they can exploit and let them decide whether ATE insurance is appropriate.