Litigation finance
Litigation Funding + ATE
Funded claims and adverse costs protection in a single structure.
Illustrative. A teaching shape, not pricing. Funding pays for the case and takes a share of the upside; insurance caps the downside for a premium. Many matters use both.
Why is ATE used alongside litigation funding?
Non-recourse funding covers the cost of running a claim, but not usually a costs order in favour of the opponent. ATE insurance is added so that adverse costs, and sometimes own-side disbursements, are protected. Funders frequently require it as a condition of deployment.
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Key points
- Funding rarely covers adverse costs by default.
- ATE is often a condition of a funding commitment.
- Staged premiums align cover with case milestones.
- The policy may be assigned or noted in favour of the funder.
Why funders require ATE
In loser-pays forums a funder can itself be exposed to adverse costs, and a claimant ordered to pay costs may be unable to do so.
ATE removes that risk and makes the case more attractive to fund.
Staging cover
Limits and premiums often step up at procedural milestones, so the claimant pays for the risk actually faced at each stage and the funder's capital commitment and the insurance grow together.
Deeds and conditions
Funding agreements and ATE policies each contain conditions — reporting, settlement consultation, termination rights — that must work together.
Where the policy is used as security, an anti-avoidance endorsement or deed may be needed.
Illustrative scenario
A funder finances £4m of costs for an arbitration; ATE covers £3m of adverse costs, staged at submission of memorials, document production and the hearing.
Figures are invented to show the mechanics. They describe no real client, matter or outcome.
Frequently asked
Why is ATE staged in funded cases?
So the cover and premium grow with the funder's commitment and the procedural stage, rather than paying for trial-level cover at the start.
Can the funder's and insurer's conditions conflict?
They can, which is why termination, settlement and reporting provisions should be aligned when both are negotiated.
Who takes out the ATE policy in a funded case?
Usually the claimant, with the funder sometimes paying the premium or holding rights under the policy.
Is a funder liable for adverse costs?
In England and Wales a funder can be ordered to pay adverse costs in some circumstances, which is one reason funders insist on ATE.
Can the ATE policy be used as security in a funded case?
Often, with an anti-avoidance endorsement or deed of indemnity addressing the court's concerns.
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.