Insurance protects cost of attorneys fees

Lisette Livingston |

Half of all U.S. citizens require the services of an attorney each year, according to the American

Bar Association, and a growing number of them are turning to prepaid legal insurance plans to cover the rising costs of attorney assistance.

Legal plans work much like other benefits: individuals enroll directly or through their employer

or another association. Members receive access to a group of attorneys and other legal resources to assist with their various legal needs in exchange for an affordable premium.

As of 2000, an estimated 122 million Americans had some form of a legal service plan. According to the American Bar Associations website, when it comes to everything from getting a will drafted, to reviewing a purchase contract to a home, to representing your teenager in traffic court, with many legal plans, these services could be yours for $9 to $25 per month charged to your credit card, taken as a payroll deduction, or even free if your employer provides legal services as an employer-paid fringe benefit.

Now, a new type of insurance plan that offers protection against attorneys fees in contract litigation cases, is gaining some attention.

While the risk to businesses and individuals is further complicated as 66% of defendants lose

their contract disputes at trial, according to the Bureau of Justice, one company, Sonoma Risk Insurance Agency is distributing the first-of-its-kind Contract Litigation Insurance in Illinois.

The policy is underwritten by Zurich in North America and helps protect plaintiffs and defendants from having to pay their adversarys attorneys fees should they lose their contract case. Arthur J. Gallagher Risk Management Services, Inc. is the preferred distributor.

With the growing instances of Loser Pays provisions, you need to be extra cautious when

moving forward with even strong cases as legal fees often are more than the damages. Now companies and individuals can decide whether or not to pursue a case based on its merits and avoid paying their adversarys legal fees, said Kevin Martin, founder and Chief Executive Officer of Sonoma Risk Insurance.

The Contract Litigation Insurance is designed to mitigate litigation exposure; allow general

counsels and people in business to budget more effectively for litigation expenses and it enables companies and individuals to pursue or defend strong claims that otherwise may have been abandoned due to financial liability.

Attorneys who share information about the benefits of litigation insurance are upholding

ethical and professional responsibilities that come with the legal field, said Damiano Servidio, head of Professional Services for Zurichs Programs unit. We are pleased that this message is resonating so quickly within the legal community and is helping us expand this new policy from where we first launched, in California, to another great market, Illinois, he said.

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