Plaintiffs lawyers know the rule: If they lose their lawsuits, they and their clients pay the expenses, while defendants often have insurance to defray legal costs. But what if there were a way to mitigate the financial risk plaintiffs assume in bringing a case to trial?
Level Insurance offers litigation cost protection insurance, which covers certain litigation expenses if a case results in a defense verdict. The insurance was developed by Justin Leto and Larry Bassuk, trial attorneys and law partners at Leto Bassuk in Miami.
“It’s a safety net for plaintiffs attorneys and plaintiffs themselves,” Leto says, noting that losing a case can destroy a plaintiffs lawyer’s business. Unlike the defense, who often can turn to a client’s insurance, no similar coverage had been available to plaintiffs.
The concept of plaintiffs insurance started several years ago. Bassuk and Leto, although not partners at the time, were practicing trial lawyers. They searched for any instruments that would cover the financial investment required of attorneys who handle plaintiffs’ cases. “Nothing was available,” Bassuk says. “We saw the need for innovation in the legal industry.”
Bassuk and Leto became partners and set about developing the coverage now available through Level Insurance—a journey that took more than three years.
“It’s rare that a new insurance product comes to market,” Leto says. The two had to develop the product and technology—applications are completed online—and obtain licensure.
“This was something that didn’t exist and that we wanted to get behind,” says Gregg Miller, senior vice president with Socius Insurance Services Inc., a wholesale broker based in San Francisco that administers the policies. “We felt there was a real need for this.” The carrier is Aspen Specialty Insurance Co.
The insurance is available to attorneys taking cases on a contingency basis as well as to plaintiffs. LevelEsq (formerly Level Insurance) provides coverage starting at $3,500 and up to $250,000. The insurance can be purchased up to 90 days after a case initially is filed; however, LevelEsq (formerly Level Insurance) is not available to lawyers who’ve been censured.
Policies reimburse most expenses incurred in bringing a case to trial, including the cost of expert witnesses, travel, e-discovery and courtroom technology. “There’s no qualifier in our definition of costs,” Bassuk says, adding that a claims adjuster won’t reject covering the cost of a second expert witness, insisting the attorney should have only hired one.
Should an attorney decide to appeal, the coverage will follow the case through the appellate process, up to the coverage limits. Conversely, attorneys aren’t required to appeal. As a result, the policies offer attorneys freedom to litigate their cases as they deem most effective, without worrying that a loss might damage their practices, Leto says.
The premiums are 7 percent of the coverage amount, exclusive of taxes and fees. The fee is the same, regardless of the type of case.
LevelEsq (formerly Level Insurance) launched last June in five states for state court actions, Bassuk says. As of early May, it was available in 21 states and for any federal district court case. “We accelerated our strategic growth in response to demand,” he says, adding that they hope to reach all 50 states.
While LevelEsq (formerly Level Insurance) initially targeted attorneys working mainly on personal injury, medical malpractice and commercial litigation cases, it has received inquiries from those involved in a range of lawsuits, including product liability and breaches of contract.
It’s also sold policies to firms of all sizes, Bassuk says, noting that some use litigation cost protection as part of their risk management policy.
When plaintiffs themselves purchase coverage, the insurance won’t reimburse their legal fees. It will, however, cover money spent on deposition transcripts, their attorneys’ travel expenses and filing fees, among other costs.
The policies differ from products offered by litigation finance companies in that they’re not loans. In addition, unlike the terms of some litigation finance loans, the policies don’t restrict how policyholders invest in their cases, Bassuk says.
“We worked extremely hard,” Leto says, “and are proud of the end product.”
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