DAS Indemnity has requested the opportunity to comment on the recent post concerning whether ATE premiums ought to be an assessable disbursement. Note that the blog below and the comments therein, are the thoughts and opinions of Nick Robson of DAS Canada, and not necessarily of Rastin & Associates.
DAS Canada is part of DAS Group, the global market leader in legal expense insurance and a subsidiary of ERGO – the primary insurer of the Munich Re Group. Since opening its doors in Germany in 1928, DAS Group has expanded across Europe and North America, arriving in Canada in 2010. DAS quickly established itself as the largest Legal Expenses Insurance Company operating within Canada, now with several hundred thousand Canadians currently protected, be it either by our Before-the-Event (BTE) or After-the-Event (ATE) insurance policies.
ATE insurance was originally developed in England & Wales, and was subsequently included in the Solicitors Regulatory Authority’s Code of Conduct as a topic that should be discussed with their client. It is a professional responsibility for a lawyer to ensure their client knows of their risks and the methods available of mitigating those risks. ATE insurance is a very important tool, as is the contingency fee agreement, in the continuing effort to increase access to justice for Canadians.
ATE insurance is not just ‘trial risk’ coverage. The insurance policy can be used to assist in the initial development of the civil action itself by allowing the client (usually a plaintiff) to incur (often substantial) disbursements as early as possible, without the financial stress involved. Currently, especially for otherwise impecunious clients, the law firm itself is often asked to provide financial assistance to the client by financing such disbursements, placing a possible conflict and/or pressure upon the lawyer. ATE insurance can securitize these expenses from the outset without the need for difficult conversations and decisions to be made. ATE insurance can be obtained from the outset, fully covering all investigatory disbursements.
Actual trial exposure is a very small (albeit meaningful) metric in an ATE insurer’s premium calculation. The frequency of a trial claim is very small compared to the usual claim type insurers see – cases being closed due to prospects of success deteriorating. In these cases, the insurer will pay back the disbursements in full and waive the premium.
Further, ATE insurance protects the client against the risks of the defendant’s use of r.49 offers, meaning that the client can (if their lawyer believes the offer can reasonably be beaten) reject the opponent’s offer and fight for their rightful damages without the fear of failing to beat the offer. It is important to note that coverage is usually suspended should the client not follow the reasonable instructions of their lawyer.
The Markovic v Richards et al matter was of interest due to that fact that the judge specifically mentioned ATE insurance and DAS Canada. However, the client was not insured by DAS Canada nor had an ATE insurance policy protecting them. The client in this case actually had an indemnity provided by an unlicensed third party company, not a regulated Canadian insurance company – this is an important distinction when it comes to surety of claims payment and regulatory oversight of company practice and protection of personal data, however it is an easy mistake to make when these products are very new in the market.
The notion that ATE insurance does not advance litigation, an old chestnut argument often heard against contingency fee agreements, fails to consider the wealth of experience currently available from the mature market in the UK. According the data provided by the British Insurance Brokers Associations’ submission to the Parliament’s Transport Committee, the number of motor insurance injury claims increased there from an average of 395,735 per year between 2000-05 by 70% over the next five years alone after ATE insurance was introduced.
Whether it facilitates a lawyer to accept a client they otherwise wouldn’t due to the risks of expensive disbursements needed to properly assess the claim, to fight back against unfair r.49 offers, to securitize a plaintiff from a security for costs motion, or to indeed push for a trial without facing the high risks that the plaintiff normally has (whereas the typical defendant is already insured). ATE insurance is a policy that certainly facilitates the prosecution of a civil action and truly levels the playing field in Ontario.
As a side note, the Markovic decision also stated that ATE insurance is only offered by one insurer in Ontario. This was true at the time for personal injury matters, however not so now. There are also other Canadian ATE insurers who underwrite commercial, medical malpractice, and other classes of litigation available.
Nick Robson is a lawyer in Ontario who manages the ATE insurance department for DAS Canada.