Contesting an ATE Premium: Case Study
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After the Event insurance premiums are often payable by clients in civil litigation. This insurance covers the risk against adverse costs/unrecoverable disbursements, if the case is lost, and frequently supplement the funding of a Conditional Fee Agreement (also referred to as a no win, no fee agreement). The use of an After the Event (ATE) insurance premium is quite common in personal injury cases.
A new market has emerged in recent years concerning clients contesting ATE premiums deducted from their damages as part of Solicitor Client disputes however, traditionally pre-LASPO such ATE premiums were recoverable inter-partes (i.e. from the Paying Party opponent).
Post-LASPO however, ATE premiums remain recoverable inter-partes, atleast to an extent, in certain types of civil litigation including clinical negligence claims and privacy/defamation litigation. This was permitted against the backdrop of Qualified One Way Costs Shifting (QOCS) being introduced to general personal injury claims and legal services, which rendered the recoverability of additional liabilities (such as a success fee and ATE premium) obsolete, on the basis that such aforementioned litigation could be particularly expensive, and the allowance of additional liabilities improved access to justice in these select areas of litigation. Such a position was reaffirmed by the Supreme Court in the matter of Coventry and others (Respondents) v Lawrence and another (Appellants)  UKSC 50.
In the scope of defamation litigation, ARC Costs were instructed to contest a Bill of Costs of in excess of £85,000, which included an ATE premium claimed in the large sum of £39,200. Ultimately a reduction of 50%+ was achieved on the ATE premium, representing a significant saving for the client.
Case Circumstances and Bill of Costs
ARC Costs were instructed by the Defendant in relation to a defamation claim concerning comments posted online about the Claimant. Such was the effect of the purported defamation, that it impacted upon the Claimant’s future career prospects and it was alleged they had become unemployable. The Claimant had taken out a staged ATE policy and ultimately issued proceedings following a denial of liability being made by the Defendant. A commercial settlement was ultimately reached immediately post-issue and a Bill of Costs was subsequently served formally with Notice of Commencement totalling £85,974, of which the ATE premium totalled a substantial proportion of the Bill at £39,200.
Notification of ATE Premium
ARC Costs prepared Points of Dispute and our instructions were to specifically challenge the large ATE premium, given that it was considered that this was the most excessive aspect of the Bill of Costs. On analysing the file of papers, ARC Costs put forward two main arguments:
- Lack of notification of the ATE policy – The Letter of Claim stated that an ATE policy was due to be entered into, but no proper notification was actually provided as to when the ATE policy was entered into. Further, as a staged policy there was a CPR requirement for the Claimant to provide in a Notice of Funding, details of the stages of the ATE premium. This was particularly important in this case as the pre-issue premium was £16,800, and this increased to £39,200 on issuance, an increase of £22,400. Further the purpose of staged premiums is to incentivise settlement however, if the Paying Party is not aware of the staging, such an incentive is lost. It was therefore submitted in the Points of Dispute that the ATE policy should be disallowed in its entirety for failure to notify the Defendant of the ATE premium, and in the alternative that the premium should be restricted to the pre-issue stage.
- Excessiveness of the ATE premium – Pursuant to Kelly & Anor v Black Horse Limited  EWHC B17 (Costs), details of how the ATE premium had been calculated. Specifically it was submitted that the case had clear prospects of success, with minimal disbursements for Court fees of £2,500 having been incurred (Counsel’s fees having been incurred under a CFA). The costs of the Defendant up to the same point in proceedings had been circa. £10,000, and utilising the formula set out in Kelly, an appropriate premium of £567.75 was calculated.
Negotiations on the Bill of Costs
Following service of the Points of Dispute, the Claimant accepted that there were issues with recoverability of the ATE premium and it was conceded that only the pre-issue stage of the premium would be recoverable. Submissions regarding the other costs claimed resulted in further reductions being achieved on the Bill however, additional interest and detailed assessment costs (as Points of Reply had been prepared) had to be taken into account.
Though we considered there was further merit in pushing the ATE premium issue further, instructions were agreed to settle the Bill in the sum of £56,000, reflecting a total reduction of £29,974 and a saving of 42% on the amounts claimed.
How Can ARC Costs Assist?
ARC Costs are a team of specialist Costs Draftsmen and Costs Lawyers who can assist in all legal costs related disputes. We regularly provide advocacy related services to professional and Litigant in Person clients, and as independent costs experts we can act for either the Paying or Receiving Party.
If you receive a Bill of Costs in defamation or clinical negligence proceedings in which you are asked to pay an ATE insurance premium, we can provide costs advice concerning prospects of reducing the amounts sought (in relation to the entirety of any costs claim made, not just on the ATE premium). We also specialise in preparing Points of Dispute, the formal legal arguments that must be raised with 21 days of any Notice of Commencement having been served, so as to set out your best position for any detailed assessment hearing.
In relation to clinical negligence claims, it is important to note that an ATE premium is only partially recoverable inter-partes. The aspect recoverable from the Paying Party is to cover the costs of expert reports in establishing breach of duty and causation, and any evidence which falls outside of this scope should not contribute towards the cost of such a premium. Typically premiums in clinical negligence are calculated on a 2:1 value basis of the cost of the relevant expert evidence, and the relevant tests were set out in the Court of
If you are awarded costs and represent the Receiving Party, we can assist in preparing a Bill of Costs on your behalf, and negotiating with the Paying Party to achieve the best outcome on your behalf. As regulated Costs Lawyers, we can conduct the processes and procedures in relation to legal costs, known as detailed assessment proceedings, on your behalf. Therefore if it becomes necessary, we can take disputed costs matters throughout the Court process to a detailed/provisional assessment hearing to obtain the best result.
To discuss your costs claim further, please do not hesitate to contact us on 01204 397302 or email one of the team using our email address: email@example.com. Alternatively, you may complete our online enquiry form and we will be in touch to discuss your query further on the same day.