What is Attorney Fee Insurance?
Attorney Fee Insurance or Litigation Insurance is a policy taken out by a plaintiff to provide an indemnity for the fees and/or out of pocket costs they incur when pursuing a commercial dispute (litigation or arbitration). If the case is unsuccessful, the insurer reimburses the plaintiff for the insured legal fees and expenses up to the agreed budget. This can help in-house counsel to manage their legal budget and avoid any unexpected surprises.
The premium for Attorney Fee Insurance is often fully contingent upon success, but typically costs less than one third of the return charged by litigation funders, which is a key differential that attorneys need to be aware of when advising their clients on potential litigation finance options. It also means insurers can consider matters where the economics (i.e. the ratio of likely damages to the litigation budget) would not be viable for traditional litigation finance.
While Attorney Fee Insurance can be used in isolation, it can also work alongside a litigation finance arrangement. For example, an insurer might cover the attorney fees in parallel to a a litigation finance company funding the out of pocket costs.
Attorney Fee Insurance
For over 17 years, we have been at the forefront of this highly specialized sector in European markets and through TheJudge Americas LLC, we bring our expertise and litigation insurance solutions (backed by major international insurers) to the US legal market.
While a new concept to many US businesses, Litigation Insurance has been actively used in thousands of commercial cases in Europe over the past decade. It is the ideal tool for clients who wish to self-finance their attorney fees and/or out of pocket costs and has the potential to fundamentally alter how US corporate enterprises manage their litigation and arbitration budgets going forward.
Cover for smaller and large value disputes:
Unlike third party finance companies who will often only consider claims in the tens of millions or above, insurers are keen to have a wider book spread, which means they will consider cases where the legal fees budget are as low as $200,000 through to multi-million dollar budgets.
Attorney Fee Insurance Premiums – How they work
Litigation insurance premiums can potentially be structured in several different ways, depending upon the scenario, case economics and the client’s preferences.
Many our clients elect to structure their litigation policies on a deferred and contingent upon success basis. A contingent premium means the insurer is only paid if the case is successful. If the case is unsuccessful the insurer receives no premium and is liable to pay a claim.
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