Insurance products

The policyholder insures against the risk of adverse costs, i.e. their potential liability for the opponent’s legal costs if the case is discontinued or lost at trial. A costs award is made against the policyholder. This product covers the policyholder’s potential liability for 100% of their opponent’s solicitor’s fees and 100% of their opponent’s disbursements (including barristers’ fees) up to the limit of indemnity provided under the terms of the policy. This cover can be purchased standalone, or in conjunction with our own side solicitor’s fees cover and/or own side disbursements cover.

Adverse costs cover case study

Disbursements can frequently become a major cost in any case, particularly one that requires reports from experts to obtain evidence. This product covers the cost of the policyholder’s own disbursements for 100% of the disbursements paid to own side advisers (other than solicitors) and experts. It provides reassurance that in the event that the policyholder is unsuccessful, they are covered for those fees up to the limit of indemnity provided under the terms of the policy. The cover can be purchased as a standalone insurance product, or in conjunction with our adverse costs cover and/or own side solicitor’s fees cover.

Own side disbursements cover case study

This product covers the policyholder’s own solicitor’s fees less a deductible payable by the policyholder which is usually 25%. It provides reassurance that in the event that the policyholder is unsuccessful, and they are covered for those fees up to the limit of indemnity provided under the terms of the policy. The cover can be purchased as a standalone insurance product, or in conjunction with our adverse costs cover and/or own side disbursements cover.

Own side solicitor’s fees cover case study

An AAE is an extension of existing cover (for adverse costs only). It ensures that the insurer cannot avoid or cancel the policy and will always pay claims up to the limit of indemnity.

The motivation for purchasing this type of cover is to avoid paying money into court when the defendant is seeking security for costs. Security for costs orders can frustrate the pursuit of even the most meritorious commercial disputes as defendants seek to stifle claims by insisting on the payment of security into court that can tie up the claimant’s capital. Forcing the claimant to pay money into court:

1. Could put them under financial pressure
2. Reduces the return on capital

An AAE enables the claimant to satisfy the defendant and the court that adverse costs will be paid in the event of an unsuccessful outcome. It is a more cost-effective way of providing the required security, as the premium payable would be approximately 10% of the value of the requested security. In circumstances where an insurance policy is deemed to be inadequate security, HUL can advise on alternatives to satisfy an order for security for costs, such as a deed of indemnity, which has been accepted as adequate security for costs in a number of common law jurisdictions.

Anti-avoidance endorsement/deed of indemnity case study

Adverse costs, own side disbursements, own side solicitor’s fees and AAE are not just available for new disputes but also for appeals i.e. mitigating the financial impact of a decision being ‘reversed’.

Existing policyholder
Available for claimants and defendants where we provided cover for the first instance trial. The policy can be extended by endorsement to cover the appeal of a successful or unsuccessful claim.

New policyholder
Available for claimants or defendants that were successful at the first instance trial and the case proceeds to appeal.

Retrospective cover can be made available to cover the first instance trial.

This product enables law firms who are operating under a Damages Based Agreement or Conditional Fee Agreement to manage their risk exposure, while maximising the profitability of the success fee for the law firm. By sharing the risk with insurers, law firms have greater flexibility to offer and grow their alternative fee portfolio in a financially controlled manner.

It is important to note that very few law firms provide Damages Based Agreements in England and Wales.

This contingency agreement cover may be requested for other common law jurisdictions.

Adverse costs, own side disbursements, own side solicitor’s fees and AAE are available to purchase under this cover.

A cross undertaking in damages is usually required by the court where a claimant applies for an interim injunction, freezing order or search order that prevents the respondent from using their assets or trading in some way.

It is a legally binding promise given to the court at the initial hearing to compensate the respondent for any loss or damage they suffer if the injunction or order is granted but at a later court hearing is found to be unmerited.