For them, there was no access to the markets for litigation risk transfer anyway. Footnote 2 Until the surge of the welfare state post-World War II, the poor had to rely on the church, guilds, unions, charity and poor relief for legal support. Nowadays, private legal expenses insurance (hereafter: LEI) and state-funded legal aid, where available, cater in part to the needs of these impecunious litigants. Some individuals just do not have the money to pay for a lawyer to start with. Apart from risk aversion, there is an issue of access to justice. For claimants, there is the additional possibility of finding someone willing – after the claim has arisen – to invest in the claim by sharing in the litigation risks or having these risks fully transferred to him in return for a share in the proceeds (if and when they accrue). For either parties, entering into a private insurance contract may help to shift these risks to a risk-neutral risk bearer.

For the defendant, similar risks apply and the award of the claim itself is an additional risk. For the claimant, such cost may include attorney fees, court fees, possibly a counterclaim for adverse costs in case the claim is dismissed, Footnote 1 and other costs. So, risk averse claimants and defendants may have reasons to look elsewhere – either in advance or as the case arises – for someone willing to bear the financial risks involved. A decision to lodge a claim in court or to defend against a claim, is a decision made under uncertainty: the costs are uncertain, and the outcome is uncertain.

Thorbecke wil het by Remieg Aerts