Commercial disputes happen frequently and can stem from various causes. The cost of resolving disputes through legal means is a significant factor to consider, particularly in today’s economic climate. A potential litigant must weigh not only their own legal expenses but also the possibility of paying the other party’s costs

For businesses with a dispute – even larger ones – pursuing legal action can be daunting, but this ‘fear factor’ is multiplied for individuals exploring the possibility of litigation. Where a small business might need some help with legal fees, an individual will invariably struggle even more. Where a start up or SME might be intimidated into dropping a case by a larger organisation, an individual will frequently be cowed with even greater ease.

It is, therefore, extremely beneficial for individuals to have a form of legal protection cover in place, as legal costs can soon become overwhelming.

Legal Expense Insurance (LEI) offers individuals the opportunity to pursue legal action without worrying about legal fees. This type of insurance provides access to expert legal advice and protects the individual or business.

It is crucial to determine whether commercial LEI or other insurance options are appropriate for your case. An advisor’s assistance can help you to understand the details and secure the best coverage. Annecto Legal can help clients navigate this decision, offering guidance to find the best solution.

What is legal expenses insurance?

Legal expenses insurance is a type of insurance coverage that provides financial protection for legal costs incurred by an individual or business in commercial or employment disputes. The coverage typically includes the costs of obtaining legal advice, assistance with negotiations, and representation at court.

Most legal expenses insurance for individuals is taken out as after the event (ATE insurance). ATE Legal Expense Insurance (LEI) protects against paying the opponent’s legal fees in case of losing a legal dispute.

An initial, up-front fee is often required for this insurance coverage. However, payment may be postponed until the end of the case in certain types of cases, and only taken from the damages, if the party is successful.

Commercial ATE insurance covers various legal battles in different areas of law. These include contract disputes, intellectual property issues, employment claims, professional misconduct, unfair dismissal, and more.

Legal expenses insurance policies usually state that any proposed legal action for which a policyholder makes a claim must have ‘reasonable prospects of success’.

What are the benefits of using legal expenses insurance for individuals?

Benefits of having Legal Expense Insurance (LEI) as an individual include: 

• Pursuit of legal claims without the worry of legal costs risk.
• Protection from paying opponent’s legal fees in case of an unsuccessful dispute.
• Shielding from interim costs orders, with potential coverage of expenses through the insurance policy.
• Encourages settlement by opponents as they know the insurer has evaluated the case’s chances of success.

How much does legal expenses insurance for individuals cost?

Before the event (BTE) legal expenses insurance is often included as an optional add on for other types of insurance, such as car insurance or home insurance. For those who do not have BTE insurance in place, they may wish to buy legal expenses insurance in the form of after the event insurance to cover the costs of commercial litigation.

The cost of after the event legal expenses insurance varies depending on certain factors. These factors include the type of case, the estimated costs of the claim, and the perceived risk.

ATE insurance is generally more expensive than BTE insurance because the risks and costs associated with the insurance are higher.

Do I need legal expenses insurance?

Whether you need LEI, such as after the event insurance for a commercial dispute depends on your individual circumstances. After the event insurance is designed to protect you against the costs of legal proceedings if you lose your case.

If you have limited financial resources and the potential costs of losing the dispute are substantial, ATE insurance can be a good option. However, if you have the financial resources to cover the costs of the legal proceedings or if the potential costs of losing the dispute are not significant, ATE insurance may not be necessary.

Who can Annecto Legal assist?

Annecto Legal offers experienced and professional services to clients seeking commercial LEI, specifically after the event insurance. After the event insurance can be obtained by any party involved in litigation after proceedings have been filed.

This type of legal expenses insurance enables clients with limited means to pay for costs, and helps small businesses to level the playing field with more resourced opponents. Annecto Legal serves both large corporates and small businesses as well as individuals, accountants, insurance brokers, solicitors and insolvency practitioners.

How can Annecto Legal assist with legal expenses insurance for individuals?

Annecto Legal helps clients realise the value of their commercial litigation claims. We provide our services to a range of clients in various types of disputes.

Contact an expert member of our team today to find out more about legal expenses insurance and which cover is the correct litigation funding choice for you.