Who we help
Businesses & Corporates
Claims are assets. Costs are liabilities.
- A judgment or award won
- A judgment against you
- Funder capital deployed
- Law firm fees and WIP
- Security for costs
- The opponent's costs
- Disbursements
- Own legal costs
Illustrative. The exposures a dispute can put on a balance sheet. What a policy responds to is set by its wording.
How can litigation insurance apply to businesses & corporates?
Pursuing or defending substantial commercial claims without exporting the downside to the balance sheet. Litigation insurance may be used here to convert an open-ended downside into a more defined one, depending on policy terms and subject to underwriting. Structures, where available, are arranged case by case.
On this page2 min read
Key points
- Terms, where available, are set case by case through underwriting.
- Pursuing or defending substantial commercial claims without exporting the downside to the balance sheet.
- Exposure can be measured across costs, capital and judgment risk together.
- Protection, where available, is arranged around the specific decision being taken, not sold as a package.
- Jurisdiction can affect how much of the exposure is costs-driven.
The exposure
A company pursuing a substantial claim carries its own legal spend from day one and, in loser-pays forums, a growing liability for the other side's costs.
A defendant carries the risk of the judgment itself. Both sit on the balance sheet, affect reserving and can distract management for years.
What can be protected
- Adverse costs and own disbursements through ATE
- Security for costs without tying up cash
- The value of a judgment once won
- For defendants, the downside above an agreed level
Management time, reputational effects and the business consequences of the dispute are not insurable in this market.
How engagements usually run
The usual sequence:
- 01
An initial outline of the dispute and the numbers
- 02
A review of counsel's opinion and budget
- 03
Agreement on what to present and to whom
- 04
Indicative terms from the market
- 05
Negotiation of wording with your lawyers before cover starts
Illustrative scenario
A manufacturer brings a £30m contract claim in the English courts, with its own costs to trial estimated at £3.5m and the defendant's at £3m. It self-funds its lawyers but insures adverse costs to trial on a deferred, contingent premium. If it loses, its exposure is its own spend; the £3m adverse costs risk sits with the policy up to the limit.
Figures are invented to show the mechanics. They describe no real client, matter or outcome.
Questions worth asking first
- Would we pursue this claim without cover, and on what budget?
- Can the defendant pay a judgment?
- Is there a security for costs risk?
- Does the claim need to come off the balance sheet for accounting, financing or transaction reasons?
Frequently asked
Can a company use litigation insurance to keep a claim off its balance sheet?
Insurance can cap the costs exposure, and funding can move costs off balance sheet. Accounting treatment depends on the arrangements and applicable standards, so take advice from your auditors.
Can defendants insure a claim against them?
Yes, through adverse judgment or contingent risk cover, which caps the loss above an agreed level.
What does litigation insurance cost a company?
It depends on the limit, the prospects and the premium structure. Many companies use deferred and contingent premiums, paid only if the case succeeds.
Can a company insure a claim it is already pursuing?
Yes. ATE is bought after a dispute arises and can be taken out at most stages, though earlier cover is usually cheaper.
Does the insurer control my company's case?
No. You and your lawyers run the case; the policy requires reporting, following reasonable advice and consulting the insurer on settlement.
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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