In short, an ATE insurance policy offers a client protection from their exposure to disbursements and adverse costs resulting from a failed action. It does not fund such costs, however may be used as a form of security for finance if needed.
Typically, an ATE insurance policy is obtained whilst acting on a contingency fee retainer, giving the client true ‘no win no fee’ protection; allowing the legal representative to mitigate the client’s remaining exposure to costs (own disbursements and adverse costs) should the action be unsuccessful. However, a contingency fee agreement is not a requirement.
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