A legal expenses insurance broker is a professional that specialises in providing and advising on legal expenses insurance to individuals or businesses. Legal expenses insurance is a type of insurance cover that helps policyholders cover the costs associated with legal actions, such as bringing or defending a business dispute.

A legal expenses insurance broker specialising in insolvency can help Liquidators, Trustees in Bankruptcy, and insolvency practitioners find insurance policies and legal funding that specifically covers the legal expenses related to these types of financial challenges.

This may include coverage and funding for legal representation and legal advice, legal costs, and other expenses associated with navigating insolvency proceedings.

At Annecto Legal, we can assist insolvency practitioners in finding the correct legal expenses coverage and funding for their client’s case to provide peace of mind.

Scroll to the final part of this article if you wish to learn about the different funding options available to pursue insolvency claims.

What are the benefits of using a legal expenses insurance broker for insolvency disputes?

There are many benefits to using a broker to ensure the insolvency practitioner has an insight into the options that are available to them. Insurance brokers have extensive knowledge of the market, including a wide range of litigation funders and after-the-event (ATE) legal expenses insurers.

A broker will understand which funders and insurers are interested in what type of case and on what terms, which an individual or their solicitor may not be as familiar with.

Moreover, brokers have the expertise and experience to be able to suggest appropriate retainers, funding, and insurance models that reduce risk and maximise returns to creditors. They can also tailor their solutions to the specific needs of a claim.

Most importantly, using an insurance broker can help to ensure informed choices are made and justified to the creditors. A broker can assess offers, explain differences, and provide a broader understanding of how funders and insurers work.

A further advantage of using a legal expenses insurance broker is that IPs can access the service with no upfront costs, and their fees are often paid by the funders or insurers upon the successful conclusion of a claim.

Whether or not the decision is made to move forward, the insolvency practitioner is now in a position to make an informed choice and to show that they have made appropriate attempts to get the best terms for their client.

Creditors, IPs, lawyers, and all parties involved benefit from a proper assessment of cases and the options available to take them forward.

Funding options for insolvency disputes

The assignment model has become a go-to for many IPs involved in insolvency litigation; however, giving up control is not always the best option for creditors, or indeed the IP or solicitors. The assignment model is something we might suggest for lower-value claims, and we always approach a range of potential buyers to secure a good deal and satisfy the professional duties of the IP.

Insolvency practitioners, Liquidators, and Trustees in Bankruptcy may also wish to make use of the following funding and insurance methods.

After-the-event (ATE) legal insurance – ATE insurance is generally used to protect from adverse costs risk & Security for Costs requirements. After-the-event (ATE) legal expenses insurance is perhaps best thought as a similar to a ‘swap’. For either no upfront fee or a small upfront fee, the insurer takes on all of the risk of the potential adverse costs award. The claimant has swapped their obligation to pay the defendants in the event of a loss, with the obligation to pay the insurer in the event of a win.

This ‘swap’ is generally an attractive swap as the client is likely to be in a better financial position following a win than following a loss. Also, the payment to the insurer will only be a percentage of the adverse costs rather than the whole amount.

Policies can be structured to allow for a very low cost in the event of a quick settlement, and indeed the ATE policy can be necessary to encourage such a settlement. Some policies will even cover issue fees, and so reduce or remove the need for external funding or assignment of claims. It can be a very cost-effective solution.

Third party litigation funding – In some cases, third party litigation funders may be willing to provide funding for an insolvency dispute claim in exchange for a percentage of any financial settlement or damages awarded. This option can be attractive for individuals who cannot afford to pay for legal fees themselves but have a strong case. ATE insurance is often used in conjunction with this type of funding.

How can Annecto Legal assist?

The services provided by Annecto Legal help IPs to meet their obligations to creditors by facilitating the best possible terms from the market. We ensure that due diligence is performed, which can justify the approach taken to creditors. This ensures that your professional obligations are met, and that you secure the right deal to take the claim forward – all whilst saving you time and making the process easy and straightforward.

At Annecto Legal, we assist a wide range of clients in finding the appropriate insolvency litigation funding, risk management and after-the-event (ATE) insurance.

Annecto Legal regularly assists licensed insolvency practitioners who are involved in insolvency disputes for their clients. If you are in the process of pursuing or defending an insolvency dispute and want to find out whether we can assist in helping you fulfil your obligations and secure the right deal, then contact Annecto Legal now.