Managing director Rocco Pirozzolo was on a panel discussing how litigants and funders can use insurance to de-risk and monetise litigation and arbitration at IMN’s International Litigation Finance Forum in London on 19 October
Products available
The panel opened by setting out the litigation insurance products currently available in the market. These now go beyond adverse costs insurance and include cover such as own side solicitors’ costs, own side disbursements, products to provide security for costs (such as deeds of indemnity) and cross-undertaking in damages insurance. Judgment preservation insurance, which has “exploded” in popularity in the US, was also discussed.
Dispute insurance exported overseas
Rocco explained that not only are more products available but dispute insurance has now been exported to other jurisdictions, particularly (though not exclusively) common law jurisdictions. He also pointed out that many products remain misunderstood and, contrary to what some believe, lawyers do not need to have “skin in the game” before an insurer will look at a case. “An underwriter will consider all the factors and the merits of the case as a whole when deciding whether to offer cover,” he said.
‘Red flags’
The panel then explored the ‘red flags’ for panellists when receiving enquiries. Rocco said it can be disconcerting when you ask supplemental questions after reviewing a submission when the response is brief and perfunctory. “You expect proper answers and look at how your questions are managed as well. Sometimes, questions are asked because presentations are not balanced. They are submitted on the basis that this is a great case, but there needs to be realism, and applicants shouldn’t be shy in showing there may be issues with a case as we expect that,” he said.
Dispute insurance still “underdeveloped”
The panel then considered what the future may hold for the market, and panellists discussed the increasing importance of insurance in collective and group actions.
Rocco said that, in his view, dispute insurance is still “underdeveloped”. It is not at the forefront of clients’ and lawyers’ minds when they are litigating: “When a client says to their lawyer, ‘What is this case going to cost me?’, there are two parts to this question,” he said. “The first is ‘How much will I have to pay your firm and in expenses?’ and the second part is ‘What will it cost me if I lose?’ This is where the value of a broker comes in because I think a lot of solicitors don’t feel comfortable having that conversation and exploring the risk appetite of their clients.”
Rocco continued: “The reality is there are no guarantees in litigation, and often you hear a lawyer saying they have a good case. Ordinarily, they say there is a 60% chance of winning, which means there is a 40% chance of losing and wasting your money on fees and expenses. I wonder whether those conversations between lawyers and clients are happening at a high level.”
Rocco was joined on the panel by Boris Ziser, Partner, Schulte Roth & Zabel; Tom Davey, Co-Founder and Director, Factor Risk Management; Robin Ganguly, Executive Director, UK & EMEA, Aon; and Nathan Hull, Director, Head of Contingent & Litigation Risk Europe, VALE Insurance Partners. The panel was moderated by Simon Warr, Lead Underwriter Legal Expenses, AmTrust International.
