Prior to the Rule change the position was that if a Part 36 Offer was made by the other side and had not been accepted, and at Trial the Claimant failed to beat that offer then, although the Claimant had ‘won’ the Defendant was entitled to ask the Court to deduct from the Claimant’s damages the amount of costs they had incurred since the offer had been made.

This could be many thousands of pounds and in some cases could wipe out the damages award. This is called Qualified One-Way Costs Shifting or ‘QOCS’.

New Rules

The Rule change means that not only can the Defendant ask the Court to set off their incurred costs against the Claimant’s damages, but they can now also set off against the Claimant’s costs.

Simply put, this means that if you do not have After the Event Insurance which protects against these risks then although you have ‘won’ your claim, you could end up with zero damages and be left with a bill for your Solicitor’s fees.

How can this be? Well technically, if you are on a No Win No Fee Agreement, (which most people are) and you had won your claim then this is a ‘win’ in the wording of the Agreement and therefore the Solicitor is entitled to charge their costs accordingly.

However, under the new regime, due to the way that QOCS operates there is a perverse situation (if you don’t have After the Event Insurance), where it may be better off to have lost your case rather than winning it if you fail to beat a Part 36 Offer.

This is because when a case is ‘lost’, the way QOCS operates, is that (as long as there is no finding of fraud or fundamental dishonesty) the Defendant will be unable to recover their costs from the losing party. In addition, under the terms of the No Win No Fee Agreement, as you have not ‘won’, your Solicitor would simply write off their costs.

Benefits of having After The Event Insurance

If you did have After The Event Insurance and you and your legal team failed to beat the Defendant’s Part 36 Offer; then the ATE Insurer would meet these costs. That is, as long as the advice to reject the Part 36 Offer and continue to Trial was one that was supported by the ATE Insurer. In that case then although the Defendant would be able to ask the Court to ‘set off’ as before; the Insurer would step in, enabling you to retain the full amount of damages awarded, meaning you could pay your contribution to legal fees in accordance with the No Win No Fee Agreement and retain the balance as normal.

‘Good’ After The Event Insurance policies (but by no means does this include all those that are available in the marketplace) will provide cover for both of the risks posed by Part 36 Offers to Client’s damages and costs, that have arisen due to the QOCS changes on the 6th April 2023.

At Express Solicitors, we believe that After The Event Insurance is a priority and your needs should be met by the right insurance product. This is why we use a market leading product which is fair and proportionate to your claim.

Some ATE providers offer modest premiums at the outset but as the claim progresses, they involve stepped premiums which have huge increases on the amount payable. Sometimes when the claim approaches Trial it triggers a stepped premium that can be many thousands of pounds and there is also a risk that some products have limited indemnity cover; which requires a Solicitor to obtain top up cover, which is normally very expensive and premiums of £20,000.00 for an extra £50,000.00 worth of top up cover are not unheard of.

You’re in Safe Hands

At Express Solicitors we use what we believe to be the best insurance product available for our clients, which provides extensive cover at a proportional premium. We make sure that Part 36 Offers are included in relation to both damages and costs at no additional cost to you.

We are trusted by the ATE Insurer to conduct your claim on a highly delegated basis which means that if your legal team has confidence in your claim being successful then your Insurer does too.

This removes the need for detailed reporting at every stage of the claim, such as obtaining permission before issuing court proceedings, or permission to reject a Part 36 offer. We feel this situation of having to obtain permission, unfairly ties the hands of clients and their solicitors. Not only does it cause delay whilst waiting for authority to go forward, but also some of the ATE insurers can pull the cover even when the solicitor and client want to press on to maximise compensation in appropriate circumstances.

It is vitally important to realise that not all ATE insurers are the same; and the Solicitor needs to assist the client in selecting one with a wide range of cover but also leaving the control of the litigation with the client, based on the advice of that Solicitor.

Our legal team can concentrate on making progress with your claim and you can be assured that you will have access to the best experts in your case and that your legal costs are fully covered too.