Litigation Risk Insurance Solutions

Ring-fence litigation-related risks to improve deal outcomes and free up capital

The risk of significant or catastrophic loss from pending litigation can erode shareholder value, force reserve requirements that can negatively impact cash flow, or prevent a merger or acquisition from closing.

On the plaintiff side, even after succeeding in winning a significant judgment in court or arbitration, businesses can protect against the risk that the judgment will be partially or completely reversed on appeal, or that the awarded damage will be reduced, and enable early payment on the award.

Parties to litigation can also protect against exposure to significant legal costs in the proceedings.

The solutions available to de-risk and monetize litigation and arbitration are increasingly sophisticated and can be tailored to achieve clients’ specific objectives.

Aon’s Litigation Risk Insurance Solutions include:

Defense-Side Adverse Judgment Insurance

Otherwise known as litigation buy-out, helps businesses ring-fence litigation-related risks, enabling them to move forward with M&A deals, financings, or other transactions, and permitting them to otherwise operate unimpeded by the specter of a potential future catastrophic loss.

Plaintiff-Side Judgment Preservation Insurance

Allows businesses that win significant judgments at trial, on summary judgment, or in arbitration to “lock in” some or all of a damage award pending appeal. As a result, immediate balance sheet benefits can be reaped from judgments that otherwise might take years to become final, and which may ultimately be overturned. It also opens up the possibility of obtaining finance secured on the award.

Insurance-Backed Judgment Monetization

Allows judgment preservation insurance policyholders to accelerate payment on a judgment or arbitral award using non-recourse loan financing secured on the policy. The loan coupon and principal are repaid from the policy pay-out if the award is lost or from successful collection from the defendant if the award is upheld.

After The Event Litigation Cost Insurance

Allows parties to litigation or arbitration to protect themselves against potentially significant costs exposure by covering the risk that they will be responsible for paying opponents’ costs in costs-shifting jurisdictions, and/or the risk of needing to write off the amounts spent on their own legal disbursements if their case is lost. Aon helps bring certainty to legal fee exposures.

Principal Protection Insurance for Litigation-Related Investments

Litigation funders and other investors in litigation-related assets can use litigation insurance to protect their capital deployed in large individual cases or across their investment portfolio, enabling them to leverage their balance sheets and obtain capital at a lower cost.

Insurance for Law Firms Acting on Risk

Law firms that act on contingency or other conditional fee arrangements can use litigation insurance to manage the risk of their fees (or “Work In Progress”) not being payable if one or more cases are lost, allowing them to achieve certainty that a proportion of those fees will be received. Coverage can apply to individual cases and across a portfolio of cases. If firms require upfront cashflow, their future income from contingency fees or pay-outs on the insurance can be accelerated using specialist loan financing on a recourse or non-recourse basis.

Thought Leadership

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The Aon Advantage

Aon’s team delivers a boutique service experience from seasoned former practicing litigation, M&A, and tax attorneys and deal professionals.

We offer a broad range of best-in-class insurance solutions and have cultivated relationships with more than two dozen trusted insurance markets that provide coverage on all manner of complex litigation-related risks. This means that Aon is uniquely positioned to structure and place substantial insurance programs of up to $1 billion on any given litigation.

We also understand where a transaction is the driver of the need for insurance that the timing and sensitivity of a deal are paramount to its success, and we work closely with your defense or appellate attorneys, your deal team, and our insurance providers to advise on and execute solutions that seek to limit your litigation risks and improve your deal outcomes, bringing a passion for developing tailored solutions to your complex risks that is unparalleled in this industry.

When working with Aon, our clients are confident that their investments are secure, that they are protected from risks, and that certainty for their positions is realized.