Over the past decade, personal injury lawyers have seen an explosion of a new insurance product offered to their law firms and to their personal injury clients. It’s called Adverse Cost Insurance or After-The Event Insurance.
How does it work and what does it do?
Adverse Cost Insurance or After-The Event Insurance serves to protect a Plaintiff from an adverse cost award following an unsuccessful trial. At trial, if a party loses, the Judge will generally order that the losing party pay the winning party’s legal fees. Those legal fees, especially after a trial can be very high. This insurance product is there to cover all, or part, of those legal fees which the losing party is ordered to pay by the Judge.
What are the benefits to this insurance?
In theory, the insurance will pay for part, or all of the legal costs if you’re unable to do so on your own.
Let’s imagine a scenario whereby a Plaintiff in a car accident case loses his/her case. After the lengthy trial, the Judge dismisses the Plaintiff’s case, and orders that the Plaintiff pay the Defendant’s legal costs in the amount of $500,000. This is entirely possible. In fact, it recently happened in the case of Belton v. Spencer. In that case, Belton sued Spencer for damages as against Spencer as a result of an accident that he sustained while walking Spencer’s horse .
Following a trial lasting over eight weeks, Belton’s action was dismissed as against Spencer. The Judge ordered that the Plaintiff Belton to pay $350,000 in legal fees plus HST, and $74,472.52 in disbursements, for a total of $469,972.52 to the Defendant Spencer. Ouch!