If you are not strongly advising your clients to consider taking out suitable ATE insurance policies, you may find yourself being sued by your client and in breach of the SRA code. Call us now to speak to one of our After the Event Insurance experts, who will be able to provide advice and guidance regarding purchase of the required ATE Insurance policies.

The Code of Conduct & After The Event Insurance

The SRA Requirement for After The Event Insurance (ATE Insurance) can be found in the Code of Conduct. The SRA Code of Conduct (July 2014 version) requires solicitors to protect their clients’ interests (Outcome 1.2), and sets out the compliance rules regarding funding and ATE Insurance. They include: discussing the risk of the client having to pay someone else’s legal fees and warning about payments which the client may be responsible for, as well as explaining the implications of a CFA and discussing the possibility of insurance. (Indicative Behaviours 1.13 to 1.17).

Client Must be given informed choice about ATE Insurance

Clearly, at the very least, the SRA Rules and indeed the SRA's views on ATE mean that the client must be informed about ATE Insurance cover and be offered the opportunity to purchase an appropriate ATE Insurance policy. The existence of QOCS is of little help - when faced with a client complaint, a solicitor would have to argue:

“Adverse costs of £10,000 were awarded against my client but QOCS applied so my client only lost all of his £6,000 damages, and therefore my failure to recommend an ATE insurance policy wasn’t negligent.”

When put this way, the solicitor’s justification is obviously unsustainable. A successful complaint by a client will most likely of course lead to an order for compensation, and a breach of the SRA Code will be prima facie evidence of negligence. Solicitors who consistently fail to comply with their professional obligations concerning ATE Insurance will no doubt face disciplinary proceedings by the SRA.

Meet with Every Client Who Refuses After the Event Insurance Cover

Please note however that solicitors need to go further when it comes to compliance regarding ATE Insurance.  A client who is simply offered the opportunity to purchase an ATE insurance policy (perhaps in a client care letter) and who declines but then faces an adverse costs order, will probably argue: “I know that you offered me an ATE Insurance policy and I opted not to purchase it, but rather than simply leaving the choice to me, your professional obligation was to have strongly advised me that I needed an ATE policy to protect me in the situation which has occurred.” If the client complains to the SRA, they are likely to take the view that when faced with a client who risked losing a large sum, the solicitor’s obligation concerning ATE protection was to meet with the client, ensure that he fully understood the risk he was taking and to strongly recommend an ATE policy purchase.

Irwin Mitchell Consider Failing to Advise on ATE Insurance is Negligent

A partner at Irwin Mitchell who is an expert on Negligence claims against solicitors makes it very clear that failing to offer your client an ATE Insurance Policy would result in a negligence claim if your client had to pay any costs, including lost disbursements. You can read the article here: http://www.litigationfutures.com/news/ate-advice-failures-trigger-negligence-claims-irwin-mitchell-warns

Check List for After the Event Insurance Consideration

It is therefore very clear that the SRA code of Conduct and Compliance regarding ATE requires a solicitor to:

1. Consider After the Event Insurance 
2. Have an arrangement in place to be able to offer ATE Insurance to clients
3. Strongly recommend the ATE Insurance to clients
4. Meet with clients who fail to take out an After the Event Insurance policy to ensure they understand the risks of proceeding without ATE Insurance protection.

The SRA and Professional Indemnity Insurance providers will be looking for this minimum level of compliance from solicitors.

The full SRA Code of Conduct Rules are set out below:

Chapter 1 of the SRA Code of Conduct 2011 requires that:

O(1.6) you only enter into fee agreements with your clients that are legal, and which you consider are suitable for the client's needs and take account of the client's best interests;

The guidance on Indicative Behaviours is that acting in the following way will show that you have complied with this:

Fee arrangements with your client

IB(1.13) discussing whether the potential outcomes of the client's matter are likely to justify the expense or risk involved, including any risk of having to pay someone else's legal fees;

IB(1.14) clearly explaining your fees and if and when they are likely to change;

IB(1.15) warning about any other payments for which the client may be responsible;

IB(1.16) discussing how the client will pay, including whether public funding may be available, whether the client has insurance that might cover the fees, and whether the fees may be paid by someone else such as a trade union;

IB(1.17) where you are acting for a client under a fee arrangement governed by statute, such as a conditional fee agreement, giving the client all relevant information relating to that arrangement;

For further information about purchasing the required ATE policies, call 0870 766 9997 or email us now to speak with one of our experts.