Glossary
The language of litigation risk.
Plain definitions of the terms used across insurance, arbitration and litigation finance. General information only — not advice, and not a description of any policy wording.
26 terms
A
- Adverse Costs
- The other side's legal costs that an unsuccessful party may be ordered to pay in a costs-shifting jurisdiction. The exposure is open-ended until it is capped or insured. Adverse Costs Insurance
- Adverse Judgment Insurance
- Cover responding to the financial consequence of losing a defended claim, arranged around a defined liability rather than the costs of running the case. Adverse Judgment Insurance
- After-the-Event (ATE) Insurance
- Insurance arranged after a dispute has arisen, typically covering adverse costs and own-side disbursements if the case is unsuccessful. After-the-Event Insurance
- Anti-Avoidance Endorsement
- A policy endorsement limiting the insurer's ability to avoid the policy, often required where the policy is offered as security for costs.
- Attachment Point
- The level of loss at which a policy begins to respond. Losses below it are retained by the insured.
C
- Capital Protection Insurance
- Cover designed to preserve an agreed portion of capital deployed into a legal asset or portfolio where the underlying matters are unsuccessful. Capital Protection Insurance
- Conditional Fee Agreement (CFA)
- An arrangement under which a law firm's fees depend in whole or part on the outcome of the matter, placing fee risk on the firm. CFA Insurance
- Contingent Risk Insurance
- Insurance addressing a specific identified legal contingency, allowing parties to transact despite an unresolved legal question. Litigation Risk Insurance
- Costs Shifting
- The principle that the unsuccessful party pays a proportion of the successful party's costs. Its scope differs sharply by jurisdiction.
D
- Damages-Based Agreement (DBA)
- A fee arrangement under which a law firm's payment is a share of recovered damages rather than a time-based fee. DBA Insurance
- Deed of Indemnity
- A separate contractual undertaking, usually given to the counterparty or the court, supporting a policy relied on as security for costs.
- Disbursements
- Out-of-pocket costs of running a case — court fees, experts, counsel — distinct from the law firm's own professional fees. Disbursement Cover
E
- Enforcement Risk
- The risk that a judgment or award, once obtained, cannot be converted into recovered value against the defendant's assets.
J
- Judgment Preservation Insurance
- Cover protecting the value of a judgment or award already obtained against reversal or reduction on appeal. Judgment Preservation Insurance
L
- Legal Asset
- A claim, judgment or award treated as an item of value on a balance sheet, capable of being funded, insured or monetised.
- Litigation Buyout
- A structure transferring the financial outcome of existing litigation off a balance sheet, often in the context of a transaction or wind-down. Litigation Buyout Insurance
- Litigation Funding
- Third-party capital provided to pay the costs of pursuing a claim, repaid from proceeds. It provides capital; it does not transfer downside risk. Litigation Funding
O
- Own-Side Costs
- The claimant's own legal costs and disbursements, which may be insured separately from adverse costs exposure. Own-Side Costs Insurance
P
- Portfolio Cover
- A single structure spanning several matters, using diversification across a book rather than pricing each case in isolation. Litigation Portfolio Insurance
- Premium Deferral
- An arrangement under which premium is payable only on a successful outcome, or at a defined later point in the case.
Q
- Quantum
- The amount in dispute, and the realistic range of recovery. Quantum can influence limit and structure as much as merits.
R
- Retention
- The portion of loss the insured keeps. Retention aligns interests and shapes where a policy attaches.
S
- Security for Costs
- An order requiring a claimant to provide security for the defendant's costs. Insurance can be offered in place of cash or a bank guarantee. Security for Costs Insurance
- Subrogation
- An insurer's right, after paying a claim, to step into the insured's position and pursue recovery from third parties.
W
- Waterfall
- The agreed order in which proceeds are distributed between claimant, funder, insurer and legal team on a successful outcome. Funding vs Insurance Economics
- Work in Progress (WIP)
- Unbilled time a law firm has invested in matters run on a contingent basis — an asset carrying real downside risk. WIP Insurance
General information only. This page is not legal, financial, investment or insurance advice. Any insurance is subject to underwriting and to the terms of the policy wording issued.
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