A new legal expenses insurance company has been set-up to target commercial clients involved in high-cost litigation.
First Legal Indemnity (FLI), which was launched last week, offers “after-the-event” insurance designed for High Court and other complex litigation, such as insolvency.
FLI has immediate authority to cover claims up to £1m but said that there was no set limit on indemnity and that each proposal would be treated on its own merits.
The legal expenses insurance market for big commercial cases has taken off in the past year and is set to grow further following last week's extension by the Lord Chancellor, Lord Irvine, of conditional fee agreements to cover all non-family civil claims.
In the past month Greystoke Legal Services has increased its maximum level of cover from £100,000 to £3m.
Litigation Protect and Ren are also understood to be targeting this market.
FLI will provide cover against liability for defendants' costs and against failure to recover the cost of disbursements. It also covers plaintiffs' solicitors working on a “no win, no fee” basis, allowing them to recover a proportion of their costs if they lose the case.
Bernard Clarke, a commercial litigation partner at West End firm Memery Crystal who helped develop FLI's product, claimed FLI stood out because of the quality of its underwriters, which include Cigna, QBE and SR International. He also promised a quick service, with decisions taking only “two or three days”.
Bob Gordon, managing director of Greystoke, said his company had just raised its maximum level of cover to target the same market as FLI, but he would not comment on the number of commercial cases his company was handling.
Mark Humphries, a commercial litigation partner at Linklaters, said there was clearly a market for insuring big commercial cases.
However, he warned that most sophisticated clients would only seek to insure the weakest cases and that to be successful, insurers would need to take substantial risks.