ATE Insurance & Litigation Finance | Audley Capital

Introduction: Why ATE Insurance Matters

In England and Wales, the "loser pays" costs rule means that an unsuccessful claimant may be ordered to pay the defendant's legal costs. For funded claims, this creates a significant financial risk that sits outside the litigation finance arrangement itself. ATE insurance bridges this gap, providing comprehensive financial protection for claimants pursuing funded disputes.

What Is After-the-Event Insurance?

ATE insurance is a specialist policy taken out after a legal dispute has arisen (as distinct from before-the-event or "BTE" legal expenses insurance, which is purchased in advance).

ATE policies typically cover:

• Adverse costs: The opponent's legal costs if the case is lost.
• Own disbursements: Expert witness fees, court fees, and other disbursements already incurred.
• Security for costs: Courts may require funded claimants to provide security — ATE can satisfy this requirement.

How Does ATE Insurance Work with Litigation Finance?

ATE insurance and litigation finance are complementary products that together provide a comprehensive risk transfer solution:

• The funder covers the claimant's own legal costs (solicitors, counsel, experts) on a non-recourse basis.
• The ATE insurer covers the defendant's costs (adverse costs) if the case is unsuccessful.
• Combined effect: The claimant has zero financial exposure — win or lose.

In practice, the litigation funder typically procures and pays for the ATE policy as part of the overall funding facility. The ATE premium is included in the litigation budget and sits within the waterfall distribution of proceeds upon success.

What Types of ATE Cover Are Available?

Specialist ATE providers offer several types of cover:

• Adverse costs only: The most basic form — covers the opponent's costs if the case loses.
• Adverse costs + own disbursements: Also covers the claimant's expert fees and court costs.
• Full cover (including own solicitor costs): Rare in funded cases (as the funder covers these), but available for unfunded claims.
• Staged policies: Cover that increases as the case progresses through stages (pre-action, disclosure, trial), with premiums adjusted at each stage.

How Much Does ATE Insurance Cost?

ATE premiums are calculated as a percentage of the insured limit and vary based on case risk:

• Low-risk cases (e.g., follow-on competition claims): 30-40% of the insured limit.
• Medium-risk cases (e.g., commercial disputes): 40-50% of the insured limit.
• High-risk cases (e.g., stand-alone competition, complex IP): 50-60% of the insured limit.

Critically, premiums in funded cases are almost always deferred — they are only paid from the proceeds if the case succeeds. If the case loses, no premium is payable. This means the claimant bears zero upfront cost for ATE cover.

When Is ATE Insurance Required?

ATE insurance is typically required or strongly recommended in the following scenarios:

• Court-ordered security for costs: Defendants frequently apply for security for costs orders against funded claimants. ATE can satisfy this requirement.
• Funder requirement: Most litigation funders require ATE cover as a condition of their funding facility.
• Competition Appeal Tribunal: The CAT typically requires funded claimants in collective proceedings to have adequate ATE cover.
• International arbitration: While not always required, ATE provides essential protection in international arbitration where costs can be substantial.

Conclusion

ATE insurance is an essential component of the litigation finance ecosystem. Together with non-recourse funding, it creates a complete risk transfer solution that enables claimants to pursue meritorious claims with zero financial exposure. Understanding how ATE works — its structures, costs, and when it's required — is critical for anyone involved in funded litigation.

For help arranging ATE cover alongside litigation finance, submit your case or contact our team.