Juxtaposing BTE and ATE - on the Role of the European Insurance Industry in Funding Civil Litigation

Abstract

One of the ways in which legal services are financed and indeed shaped, is through private insurance arrangement. Two contrasting types of legal expenses insurance contracts (LEI) seem to dominate in Europe: before the event (BTE) and after the event (ATE) legal expenses insurance. Notwithstanding institutional differences between different legal systems, BTE and ATE insurance arrangements may be instrumental if government policy is geared towards strengthening a market-oriented system of financing access to justice for individuals and businesses. At the same time, emphasizing the role of a private industry as a keeper of the gates to justice raises issues of accountability and transparency, not readily reconcilable with demands of competition. Moreover, multiple actors (clients, lawyers, courts, insurers) are involved and this causes behavioural dynamics that are not easily predicted or influenced.

Against this background, this paper looks into BTE and ATE arrangements by analysing the particularities of BTE and ATE arrangements currently available in some European jurisdictions and by painting a picture of their respective markets and legal contexts. This allows for some reflection on the performance of BTE and ATE providers as both financiers and keepers. Two issues emerge from the analysis that are worthy of some further reflection. Firstly, there is the problematic long-term sustainability of some ATE products. Secondly, there are challenges that policy-makers who would like to nudge consumers into voluntarily taking out BTE LEI need to face.

Keywords: Legal Expenses Insurance, Conditional Fee Arrangement, After the Event Insurance

JEL Classification: G22, K12, K41