Legal expense insurance - litigation funding

Litigation funding can be expensive, may take years to resolve and can be a stressful unappealing prospect for businesses. If you lose then the general rule is that you pay the winner’s costs. This is on top of covering your own legal costs. The thought of this for many businesses can be very off-putting, even for most successful businesses who have a strong claim.

In this position, businesses are likely to consider other ways of funding litigation that pose less of a financial risk to their business. One alternative funding method is legal expenses insurance (LEI) - but what should you consider before purchasing LEI?

 

loading staff

Are you already covered?

Before purchasing LEI, it may be worthwhile reviewing all your current insurance policies. LEI is commonly attached to insurance policies such as motor, home, credit card and travel insurance. You may also be entitled to free legal advice if you are a member of professional bodies or organisations, such as trade unions. Therefore, it is a good idea to see whether you already have the benefit of a LEI policy that you had previously overlooked or forgotten about.

Are you guaranteed to get cover?

The vast majority of insurers will require your case to enjoy prospects of success in excess of 50%, i.e. that there is more chance of you winning your case rather than losing. If after review of your case, your insurer is of the view that your case does not enjoy prospects of success, your insurer is unlikely to fund your case.

Are there time limits for you to consider?

There are normally limitation periods that you must adhere to if you wish to pursue a claim. If you try to make a claim beyond the limitation period, you will be prevented from doing so. The limitation periods differ depending on the type of dispute you are involved in.

As well as limitation periods, there are normally time limits in which you must report your claim to your insurer. As a rule of thumb, it is advisable to report the dispute to your insurer as soon as possible to seek legal advice on the appropriate next steps.

Is it proportionate to pursue a claim?

The value or ‘quantum’ of your case is important. Your insurer will review your case to determine whether it is proportionate for them to provide cover for your case. For example, if you are in dispute with another party over £1,000 but it will cost your insurer £2,000 to resolve the dispute, it is unlikely to be proportionate for your insurer to pursue the case on your behalf. Insurers will also consider whether your opponent is solvent and whether they can meet any Court judgment you may obtain against them. If you opponent is in financial difficulty or if they do not have any assets, your insurer may not provide cover for your case as they are unlikely to recover their costs from your opponent if you win your case. Your insurer will therefore take a commercial decision as to whether they will provide funding for your case.

If you need any further information regarding this process please contact our commercial litigation team on 0203 816 9303.

9.2 out of 10
Trustpilot logo5-stars on trustpilot Based on count 446

We're Great

It is our business to deliver legal services that work for our clients, and you can trust our specialists to take care of things on your behalf.

Our Trustpilot reviews

The situation was very personal and at times very distressing but Stephensons were extremely professional but also empathetic.
View from a commercial litigation client

Appeal Court finds business rates have been incorrectly charged on ATMs since 2010

Supermarket, shop and petrol station owners who have previously been charged business rates for having an ATM located on their premises may be eligible for refunds. In 2013 it was decided that external facing ATMs should be treated as separate...

Read more

Twitter commercial

Lancashire Police launch Christmas drink-drive campaign

Lancashire Constabulary has launched a new campaign targeting drink and drug drivers this Christmas. The campaign, launched on December 1 st , will see Lancashire Police implement high profile enforcement activity on the regions roads throughout...

Read more

Commercial reorder

  • Jonathan Chadwick
  • Louise Hebborn
  • David Baybut
  • Kate Bullen
  • Chris Graves
  • Alistair Gregory
  • Philip Richardson
  • Julie Ball
  • Martha McKinley
  • Paul Davies
  • Jonathon Waterhouse
  • Christopher Carney
  • Jessica Charnock
  • Matthew Halton
  • Julie Hunter
  • Adam Pennington​​
  • Andrew Whitehead
  • Mark Williams​
  • Christopher Marsden
  • Natalie Waddington
  • Neil Marshall
  • Declan Gilroy​
  • ​Kerrie Ainscough
  • Matthew Smith

We're always here for you

As an award-winning top 150 law firm, with over 450 staff based in offices across the country, you're never far from the advice you need.

Find your nearest Stephensons office and arrange a meeting

As an award-winning top 150 law firm, with over 450 staff based in offices across the country, you're never far from the advice you need.