As a lawyer, it’s your job to consider the legal risk a client is taking on when pursuing a case. You’ll consider the client’s chances of winning their case, and their risk of being unsuccessful before recommending any action. But evaluating the client’s legal risk may not sufficiently cover their tolerance to the financial risks of litigation.
Take, for example, a personal injury client who is unsure about taking their case to court. They have received an offer of settlement from the defendant, but you both agree the offer is low. After assessing the case, you come to the conclusion that your client, the claimant, has a fairly good chance of winning the case. You try to persuade them to take the case to court and push for a better settlement but, your client is still unsure. Why? Because of the financial risk.
Why Legal Risk Assesment isn’t Enough
What many lawyers fail to realize is that the financial risk a client is taking on often means much more to them than any legal risk. Regardless of whether or not a lawyer believes the legal risk in the case is minimal, clients are going to be primarily concerned with whether or not they are at risk of having to pay costs. In fact, most client’s risk tolerance when it comes to financials associated with litigation is minimal to none.
When a plaintiff chooses to not accept an offer of settlement, they are exposed, at the court’s discretion, to the risk of being ordered to pay defense costs (possibly even double), from the date of the offer to trial. This can mean that the client ends up winning their case but comes away with little to nothing, or even comes away owing an amount to the defendant.
If a lawyer chose to encourage the client to pursue the case based on the assessment of legal risk, this would be a successful outcome. The client won the case, meaning the legal risk of going to court paid off. But to the client, the financial implications will make it feel more like a loss than a success.
Protect Clients from Financial Risk
Luckily, there is a way to ensure clients they are protected from financial risk as well as legal risk. With a Redress After the Event (RATE) Insurance policy, clients are protected from adverse costs when pursuing a case. RATE coverage is very flexible, but depending on the chosen plan, your client could be covered for:
- Adverse costs and own lawyer’s disbursements if the case fails to beat a formal offer
- Own lawyer’s disbursements if the case is abandoned or withdrawn
- Interim order for costs
- The RATE premium itself
- Much more
After the Event Insurance in Canada is rising in popularity, meaning it is becoming more and more common, even necessary, to advise clients of their risk management insurance options. With a Redress After the Event insurance policy, you protect both your client and your firm from financial risk with our two unique programs, Full Litigation Protection and the Trial Protection.