By Sukhbir Kaur, Senior Underwriter
(Estimated reading time: 4 minutes 13 seconds)
Unfortunately, sometimes a professional gets it wrong. A service provided falls short, they fail to perform their duties to the levels expected and cause financial or reputational harm to a client resulting in the need for legal action. In professional negligence claims, ATE insurance is particularly valuable because of the high stakes often involved, both in terms of potential liability and financial outlay that could be faced by the client.
Professional negligence claims span a broad spectrum of industries, but they share some common traits: they are often complex, costly, and fiercely contested by defendants with deep pockets or insurers ready to ‘fight’. In some cases the losses caused to the client are so significant that the client has no recourse but to choose the legal route for compensation.
Addressing a misconception
A key part of professional negligence claims is to establish that –
- A duty of care existed between the client and the professional
- That the service provided by the professional fell below the level expected.
There is a misconception that there must be a written contract for a duty of care to exist, in reality, where there is a written contract in place, a professional’s duty of care is limited to carrying out work agreed with the client. However, it is important to remember that where there is no written contract, but a professional undertakes responsibility for a task, they have voluntarily assumed a legal duty in tort law.
As a solicitor you will understand the fine line between victory and defeat can hinge on how robustly a case is presented. But even the strongest of cases can falter if your client could be seriously financially harmed by the costs of litigation, or worse, deterred from bringing a claim altogether due to fears of a hefty adverse costs order.
Enter After-The-Event (ATE) insurance, often the unsung hero of much litigation funding activity, and disbursement funding. Both can provide a lifeline for some clients, as it allows them to pursue meritorious cases which otherwise may not proceed.
Temple’s experience at the front line
We see a lot of professional negligence referrals requiring ATE insurance. These can be at several different procedure stages – pre-action stage, identification of the breach of duty through to disclosure stage to before the trial. The value of these claims can be from £50,000 to over £1,000,000 – and more.
The complexity of the cases we see also varies, from a will having been drafted negligently to a vet misdiagnosing a life-threatening disease – or survey reports not being compliant with rules and regulations. Other cases have involved rights of way not being fully investigated (leaving the client landlocked), through to not providing the correct advice for money laundering cases – to name just a few.
How ATE Insurance fits into Professional Negligence Cases
Below are two common professional negligence scenarios in a little more detail:
- Solicitor negligence: where a solicitor fails to meet a limitation deadline for a personal injury claim. Such claims often attract significant legal costs, and the defendant’s insurer is likely to rigorously defend the case. Here, ATE insurance will protect the claimant from having to pay the solicitor’s legal fees if the claim fails, while giving the solicitor the confidence to pursue the claim without fear of underfunding.
- Architect negligence: A property developer might sue an architect for providing flawed plans that lead to costly delays and rectification work. The developer’s legal fees, along with expert reports and other disbursements, may escalate quickly. If the case were unsuccessful, the developer could be liable for both their own disbursements and the opponent’s costs. An ATE insurance policy would mitigate these risks and ensure the developer could pursue their claim without the spectre of potential financial ruin hanging over them.
Disbursement Funding
While ATE insurance takes care of adverse costs risk, another significant hurdle in professional negligence claims is the funding of disbursements to cover financial outlay on expert reports, court fees and other out-of-pocket expenses. This is often arranged alongside the ATE policy, providing the client with the cash flow needed to cover expenses as the case progresses. Like ATE premiums, the funding is typically repaid only if the case is successful, ensuring the client’s cash flow is not affected during litigation.
The Temple Perspective
As solicitors, you want your focus to be on representing your clients to the highest standard; worrying about whether they can afford to take the case forward can be an unwelcome distraction.
We understand that the adverse consequences of getting something wrong is damaging for most clients – leaving them out of pocket and worried about the future. Legal resolution often requires deep pockets and clients often need a helping hand with those costs.
In the event of a loss, with Temple’s cover, the costs of an insured’s own disbursements are insured so we would not look to the insured to repay the disbursement funding or interest. Peace of mind for your clients – something that can make all the difference.
If you would like more information on ATE insurance and disbursement funding for a professional negligence case, or you have any other legal expenses insurance query, please email or call me on 01483 514809.
Sukhbir Kaur
Senior Underwriter
Sukhbir Kaur
Sukhbir has an LLB honours degree in Law, she also completed the Legal Practice Course obtaining a Commendation.
She qualified as a Solicitor in 2020, she has worked in the personal injury sector for over a decade.
She joined the Commercial team at Temple Legal Protection as an Underwriter, in 2023.
Prior to joining Temple, Sukhbir worked in the Serious Injury team doing multi track work at a leading Law firm, dealing with injuries arising from road traffic accidents, accidents in the work place and public.
Her background has led her to have an interest in risk insurance.
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