When Justin Leto was a young plaintiffs attorney, another lawyerin his building asked how he dealt with the financial risk of pursuing litigation.Could his firm somehow insure legal costs in case the jury returneda defense verdict?

There was no such protection. “If we lose the case, there’s noway for us to get any of that back,” Leto told Larry Bassuk, nowhis law partner at Leto Bassuk in Miami.

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But in that conversation was the seed of an idea, which thissummer blossomed into a new kind of company. Level Insurance offersup to $100,000 in coverage for plaintiffs attorneys’ costs in theevent of a defense verdict.

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The policies, which cover individual cases rather than lawyersor firms, are available for federal court cases in all 50 statesand state court cases in California, Florida, Illinois, New Jersey,New York and Texas. Level Insurance plans to roll out across thecountry in the next few weeks.

The policies cover a wide swath of litigation areas, includingauto negligence, medical malpractice, contract disputes, productliability and premises liability. Level Insurance will not insure alawyer who has been disciplined by the state bar or coverlitigation against the government. But other than that, the companydoes not analyze the merits of a case.

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That could be risky business, said Aaron Davis, who handles bothplaintiffs and defense work for Davis Goldman in Miami. He notedthat other litigation finance companies usually rigorously vetcases.

“It’s a different model, but the premise is the same: You stillwouldn’t insure something against a loss if you don’t understandthe risk of that same loss,” he said.

But because Level Insurance only pays out a policy if the casereaches trial and a jury awards no money to the plaintiff, thecompany isn’t on the hook for lawsuits that are dismissed in theearly stages of litigation.

Cases of all sizes

New York plaintiffs attorney Andy Buzin has already used Level.As a solo practitioner with many clients who can’t afford to pay anhourly billing rate, “there’s never any guarantee of an outcome,”he said. “This is something that you can use to lessen your risk inbeing the little guy who takes on insurance companies and bigcorporations on contingency.”

Defense attorney Mark Rose of Roig Lawyers in Deerfield Beach,Florida, said he doesn’t expect to see an uptick in frivolous casesfiled by the plaintiffs bar, but “will it encourage, perhaps,riskier suits or more complex cases? I think so,” he said. “I thinkthat’s a reasonable expectation.”

“You might see less well-funded firms, maybe smaller firms, thatare more inclined to take on a more complex or riskier case,” hesaid.

Level’s founders say the company ultimately aims to providecoverage to larger law practices, as well as small firms andsolos.

Plaintiffs attorney Philip Freidin of Freidin Brown in Miami isa litigator who brings multimillion-dollar personal injury, medicalmalpractice and tobacco cases to trial.

“We take the best cases that come in, and they pretty much allhave some degree—from moderate to high level—of risk,” he said,adding this is the first way he’s been able to mitigate that risk.He’s hopeful the company will increase its policy limits as itgrows.

Cofounder Leto noted that even big firms feel the crunch at atime when it can cost $5,000 just to bring one expert witness totrial.

“As the business of law continues to evolve and change, it’sbecome more and more costly,” he said. “Everything that we did 10or 15 years ago is exponentially more expensive today.”

Gregg Miller, chief sales officer for Socius Insurance ServicesInc., which manages Level Insurance, said the brokerage isapproached all the time about new insurance concepts. “Thisparticular product stood out to us as an innovative product thatdidn’t already exist in the marketplace,” Miller said.

How it works

To purchase insurance through Level Insurance, lawyers visit thecompany’s website, LevelInsurance.com , and submit a copy of acomplaint, which must have been filed in the past 60 days.

They then choose policy limits between $3,500 and $100,000 tocover costs including expert witness fees, travel, e-discovery,court reporters, trial exhibits and courtroom technology. For everycase, the premium is 7 percent of the policy limits.

The insurance covers costs starting at the time the lawyer wasretained in the case, meaning some covered costs can pre-date thepurchase of the policy, and coverage extends through the appealsprocess.