Litigation cost protection—an insurance product that exists in Canada and the UK—is about to make its big debut in a country infamous for its litigiousness: the United States of America.
Essentially, the product serves to help protect lawyers who lost in trial from out-of-pocket expenses. It is thought that the introduction of litigation cost protection to the U.S. could be a game changer for the country’s tort landscape, or make things far worse.
Level Insurance, a company founded by litigators Justin Leto and Larry Bassuk just last June, touts that it is the first insurer of its kind in the U.S. that offers litigation cost protection, also called “after the event” (ATE) insurance.
Forbes ran a feature on the pioneering insurer, noting that Level Insurance is providing insurance policies for up to US$100,000, at a flat fee of 7%. The insurer only requires that lawyers must purchase the policies within 60 days of serving papers on the defendant, and that they can only collect on the policy if they lose.
San Francisco-based broker Socius Insurance Services Inc. manages Level Insurance’s product, while financial risk is backed by Bermuda-based
Aspen Insurance Holdings Ltd.
Notably, Level does not assess the merits of a case when in the process of writing a policy; the insurer only checks if whether the lawyer is in good standing with the state bar.
An article on
Bloomberg Law weighed the worth of introducing ATE insurance to the U.S.
John T. Lay, president of the International Association of Defense Counsel and an attorney at Gallivan White & Boyd in Columbia, South Carolina, told
Bloomberg Law that insurers like Level could encourage more trials and overburden the court system by offering plaintiffs’ lawyers financial protection against losing their cases.
“That puts the lawyers in a conflict where it might be better for the client to settle, but they go to trial anyway,” Lay added.
On the other end, the product could inspire lawyers to stand by their clients.
“[ATE insurance will] allow those who might consider staying on the sidelines to file and fight,” said Robert Hilliard, considered one of the top plaintiffs’ attorneys in the U.S.
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