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Complementary but distinct: the role of ATE insurers, brokers

DAS Legal Protection Inc. - Dominique Zipper
DAS Legal Protection Inc. - Joanna Milnes

An insurance broker could be the bridge between an insurer offering after-the-event (ATE) coverage and a law firm fighting on behalf of a client in court, say Dominique Zipper and Joanna Milnes, both with the legal expense insurance company DAS.

Zipper, Director of DAS Canada's After-the-Event (ATE) insurance, tells the company issues and administers insurance policies and handles claims whereas a broker is an intermediary whose focus is to introduce DAS to law firms.

After a claimant decides to commence legal action, ATE insurance can be utilized to provide protection against the risk of losing and having to pay the other side’s costs, she explains.

It safeguards claimants from having to cover their own disbursements if the case was unsuccessful, and while it can be used in any litigation, it is prevalent in personal injury cases where counsel often work on contingency fees, Zipper says.

"It is distributed through lawyers as we only insure actions where plaintiffs are represented by counsel," she says. "The broker has a key role in informing law firms of their options in the market.

"One of the key roles of ATE brokers is to raise awareness of ATE in the legal industry," she says. "There are different types of ATE insurance just as there are different types of legal actions for which this type of insurance is available."

Milnes, ATE consultant at DAS, says brokers also assist with initiating the relationship between law firms and the insurer.

"They often have more contact with the law firms and have an understanding of their requirements based on their practice and their volume of work," she says. "The brokers relay that information to us in terms of setting the groundwork to potentially set up a contract.”

The broker uses their knowledge of a law firm's practice to establish a relationship, Zipper says. They also help collect updated information about the law firm with respect to its practice areas and focus, the number of its lawyers, their file size and their intake capacity per year, Milnes adds.

"Once the ATE program has been initiated with the law firm, DAS takes over the day-to-day contact as we administer the product," she says.

DAS also measures how a firm is trending, Zipper says.

"We measure metrics such as a law firm's win ratio and abandonment ratio, as well as the average duration of a law firm's cases," she says. “This is powerful information for the law firm, especially if it is seeking to transform certain aspects of its practice that may be weak links. And it's crucial information for the law firm's profitability.

"If we issue 1,000 policies for a law firm's clients, we track the proportion of policies that are successful at trial, that are abandoned before trial and so on," Zipper says. "From my experience, that is not a metric small- to medium-sized firms are measuring with intention."

Insurance companies make the decisions on underwriting and claims, issuing policies and claim payments, she says.

"The ultimate decision rests with the insurance company — the broker doesn't have the authority to make any decisions about a policy being issued, or a claim being paid," Zipper says.

Still, brokers play an important role in advocating for law firms in complicated cases, she says.

“In some cases, a policyholder requests coverage under a policy where there is none, which we refer to as an ex gratia claim payment," Zipper says.

ATE is relatively new in Canada, but she notes it’s growing very quickly.

"It's becoming commonplace for personal injury lawyers to offer this coverage to their clients. In other parts of the world, it has evolved as a standard operating procedure for personal injury law firms,” Zipper says.

For example, in the U.K., if a lawyer doesn't offer ATE to a client, they could be subject to a negligence claim, she says.

Zipper says a similar landscape is developing in Canada: "Since so many personal injury law firms are offering ATE insurance, a plaintiff would be justified in questioning why his or her lawyer did not advise of the existence of ATE insurance and  about the coverage it provides."

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