MOJ ruling leaves law firms at risk of professional negligence claims warns Elite Insurance

01 Mar, 2013

“The Jackson reforms, due to take effect on the 1st April 2013, leaves law firms at risk of professional negligence claims”, warns Russell Smart (pictured), COO of Elite Insurance.  

Any Conditional Fee Agreement (CFA) entered into prior to 1st April where ATE insurance has not been purchased can potentially leave clients facing bankruptcy or law firms’ exposed to negligence claims.

The new rules prohibit the recovery of ATE premiums for policies purchased on or after 1st April -regardless of when the client entered into a retainer with their solicitor.

There are thousands of CFA cases where ATE insurance has not been purchased either because the case is not insurable until investigations are complete, or because BTE enquiries are on-going.

Despite many of these CFA’s entered into some weeks and possibly months ago will mean the client will not benefit from recoverable ATE premiums – neither will they be afforded the protection offered by QOCS, nor the 10% increase in general damages.

Such clients will now have to pursue their cases uninsured or face disproportionately high ATE premiums which will have to be paid for from their damages.

“The rule merely emphasizes the lack of thought put into these reforms and highlights the Government’s incompetence. ATE insurers tried to engage with LJ Jackson and the MOJ over the last three years but without success and therefore it does not come as a surprise that they have not thought through the ramifications” continues Russell Smart, at Elite Insurance.

“The rules should be amended to allow for recoverable ATE premiums based on the date the CFA was entered into.  However given the Government’s haste this is unlikely”.

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