August 23, 2008

UK insurance company FirstAssist will offer a new litigation insurance product designed for class actions and other complex suits, the Financial Times reports. While businesses may worry that the product will lower barriers to anti-growth litigation, this news demonstrates that a loser-pays rule can work in the context of complex claims.

Plaintiffs filing personal injury claims in England and Wales usually purchase so-called after-the-event (ATE) insurance, which protects the purchaser against liability for the opposing party's legal fees in the event that the case is lost. ATE insurance received a big boost in popularity when parliament cut off public aid for most tort suits and legalized conditional (or contingency) fees in the late 1990s.

This new move by FirstAssist shows that legal expenses insurance can scale up to meet the needs of large plaintiff groups, sending one more objection to loser pays in the U.S. by the wayside.