Contract Litigation Insurance

What is Contract Litigation Insurance?

A new surplus lines program, underwritten by Zurich, that insures litigants from the risk of having to pay their adversary’s attorneys’ fees pursuant to a prevailing party provision in a contract• Plaintiff Contract Litigation Insurance (“PCLI”) protects plaintiffs from paying their adversary’s attorneys’ fees; Defendant Contract Litigation Insurance (“DCLI”) protects defendants.

Why Contract Litigation Insurance?– Because if your clients lose their contract disputes, they could get hit with paying their adversary’s attorney’s fees

What is a Prevailing Party Provision?– It is a clause in a contract that says if there is a dispute between the parties the loser pays the winner’s attorney’s fees

Prevailing Party Provisions are also called:

– Fee-shifting Provisions

– Adversary Attorney’s Fees Provisions

– Attorney’s Fees Provision

Prevailing Party Provisions

• Many courts have described attorneys fees as, the tail that wags the dog in litigation, exposing clients to huge risk

• Prevailing party provisions exist in many types of contracts and can influence the course of litigation

• Typical prevailing party provision:

What is Contract Litigation Insurance?

“In the event that a dispute arises with respect to this Agreement or any of the terms or provisions thereof, the party prevailing in such dispute shall be entitled to recover from the other party its costs, including reasonable attorneys’ fees and expenses, incurred in ascertaining such party’s rights under this Agreement, whether or not it was necessary for such party to institute suit.”