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FLK 1 - Legal Services > 4. Funding of Legal Services > Flashcards

4. Funding of Legal Services Flashcards

1
Q

What is paragraph 8.7 of the Code of Conduct for Solicitors?

A

You ensure that clients receive the best possible information about how their matter will be priced and, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of the matter and any costs incurred.

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2
Q

What are the possible consequences of failing to advise a client about the relevant funding options available?

A
  • a complaint by and dispute with a dissatisfied client
  • disciplinary action by the firm and/or SRA
  • in civil court proceedings, a non-party costs order being made against solicitors who fail properly to advise their clients or arrange insurance on their behalf
  • possible claim of professional negligence
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3
Q

What is the retainer?

A

the contractual relationship which exists between solicitor and client

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4
Q

What is the retainer letter?

A

the contract between the solicitor and client

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5
Q

What does the retainer letter set out?

A
  • the scope of the work to be undertaken
  • the client’s instructions
  • the fees/hourly rates/fixed rates to be charged
  • reporting obligations on costs at the start and throughout the matter
  • reporting obligations on progress of the case or matter
  • termination of the retainer by either party
  • circumstances where a lien may be exercised for unpaid fees
  • other information to show compliance with Client Care Outcomes and the Code of Conduct for Solicitors
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6
Q

What is private funding?

A

client is personally responsible for solicitor’s fees an disbursements irrespective of the outcome of the case

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7
Q

What is a fixed fee?

A

amount to be charged is established at the outset.

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8
Q

When are fixed fees common?

A

conveyancing transactions

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9
Q

Can a fixed fee be altered at a later date?

A

no - unless the client agrees

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10
Q

What is contentious business?

A

work done in relation to proceedings

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11
Q

When does contentious business start?

A

only once proceedings have been issued

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12
Q

what is non-contentious business?

A

work that will not or does not lead to court proceedings.

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13
Q

What are ways a solicitor may be remunerated under a non-contentious business agreement?

A
  • a gross sum
  • commission
  • a percentage
  • a salary

can be others

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14
Q

For a non-contentious business agreement to be enforceable, what requirements must the agreement comply with?

A

must:
(a) be in writing;
(b) be signed by the client;
(c) contain all the terms of the agreement (including whether disbursements and VAT are included in the agreed remuneration).

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15
Q

Can a client apply to have a bill assessed by the court under a non-contentious business agreement?

A

if provisions are complied with no.

But the court may set the agreement aside to reduce remuneration if the amount charged by the solicitor is unfair or unreasonable.

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16
Q

What are ways a solicitor may be remunerated under a contentious business agreement?

A
  • a gross sum
  • an hourly rate
  • a salary

can be others

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17
Q

What is one way a solicitor may NOT be remunerated under a contentious business agreement?

A

a contingency fee

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18
Q

For a contentious business agreement to be enforceable, what requirements must the agreement comply with?

A

(a) the agreement must state it is a contentious business agreement;
(b) the agreement must be in writing;
(c) the agreement must be signed by the client; and
(d) the agreement must contain all the terms

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19
Q

Can a client apply to court for a costs assessment under a contentious business agreement?

A

no - except where the agreement provides that the solicitor is to be remunerated by reference to an hourly rate.

However, the court may set aside the agreement or reduce remuneration if it is unfair or unreasonable.

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20
Q

Who must a distinction be drawn between regarding costs in civil litigation?

A

Solicitor and client costs and costs between parties that may be awarded at the end of the case.

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21
Q

When must a solicitors explain the distinction between parties regarding costs in civil litigation to the client?

A

at the outset of the case

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22
Q

What is the general rule on costs in civil litigation?

A

The unsuccessful party will be ordered to pay the costs of the successful party.

The amount to be paid will be agreed or assessed by
the court.

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23
Q

Generally in civil litigation what is the rule on a client paying their solicitor’s fees and how does it differ if they win or lose?

A

in all cases (win or lose) they would pay their own solicitor’s costs.

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24
Q

What is a conditional fee agreement (CFA)?

A

An agreement with a legal advisor which provides for their fees and sometimes their expenses, or any part of them, to be paid only if the client wins the case

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25
Q

What is an example of a CFA?

A

no win, no fee

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26
Q

What may a solicitor charge in the event of a win (regarding CFA’s) ?

A

may charge an agreed uplift

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27
Q

In a CFA if a client loses the case, what may they be liable for?

A

their opponent’s costs disbursements, barrister fees, etc.

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28
Q

What should a solicitor advise their client to protect them in case they lose a case? (CFA + DBA + 3rd party)

A

to take out a legal expenses insurance alongside a CFA/DBA agreement or third party funding.

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29
Q

When can a CFA not be entered into?

A

for family or criminal proceedings

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30
Q

What is a damage based agreement (DBA)?

A
  • another type of CFA
  • legal advisor can recover percentage of client’s damages if case is won
  • but if lost, receives nothing.
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31
Q

What does a fixed fee agreement include?

A

fixed fee + disbursements + VAT

32
Q

What is legal expenses insurance?

A

an insurance policy taken out after a legal dispute has arisen and covers a party’s potential liability in the event of losing their case, in respect of their own disbursements and their opponent’s costs and disbursements.

33
Q

What is the maximum for the success fee in a CFA?

A

cannot exceed 100% of the solicitor’s normal charges

for PI: additional cap of 25% of the general damages recovered.

34
Q

If a client wins the case and the opponent is ordered to pay client’s costs, are these included in the success fee?

A

No - payable by the client.

35
Q

Before entering into a CFA what factors should the solicitor consider when conducting a risk assessment?

A

(a) the chances of the client succeeding on liability;
(b) the likely amount of the damages;
(c) the length of time it will take for the case to reach trial;
(d) the number of hours the solicitor is likely to have to spend on the case

36
Q

What is the cap that a DBA is subject to?

A

must not exceed 50% of the sums ultimately recovered by the client. (including VAT)

for PI cases: 25%
for Employment: 35%

37
Q

In what proceedings does the cap for DBA’s not apply?

A

appeal proceedings

38
Q

What is the cap for DBA’s inclusive of and what does it not include?

A

inclusive of counsel’s fees but not other disbursements for which the client will remain liable

39
Q

How is the enhanced rate calculated in CFAs and DBAs?

A

The enhanced rate in CFAs is calculated by reference to an uplift in the solicitor’s usual hourly charging rate, while in DBAs, it is linked to the damages received.

40
Q

What is the limit on the success fee in CFAs, and how does it compare to DBAs?

A

The success fee in CFAs is limited to 100% of the usual hourly rate, whereas the contingency fee in DBAs cannot exceed 50% of the damages.

41
Q

What happens if the case is unsuccessful in both CFAs and DBAs?

A

In both arrangements, the client is not required to pay their solicitor’s fee if the case does not succeed, or they pay a lesser amount according to the agreement.

42
Q

What costs are not covered by either CFAs or DBAs?

A

the client’s disbursements or the opponent’s costs, which must be dealt with separately.

43
Q

What is a common requirement for both CFAs and DBAs?

A

Both CFAs and DBAs must be in writing.

44
Q

How do the availability and terms of CFAs and DBAs vary?

A

The availability and terms of these funding arrangements depend on the unique aspects of each case and the challenges of predicting litigation outcomes.

45
Q

What is before-the-event insurance (BTE)?

A

an insurance policy which will cover payment of their solicitor’s fees

46
Q

For BTE to apply what must happen?

A

the insurer must accept the claim

47
Q

Why may an insurer not accept a claim for BTE? (2 reasons)

A

the case does not have a good prospect of success (more than 50%)

OR

the case concerns issues that arose before the policy was taken.

48
Q

What is an issue that can arise with legal expense insurance?

A

that the insurer will usually wish the case to be conducted by a firm on its own panel of solicitors.

49
Q

What is after-the-event insurance (ATE)?

A

Covers the legal expenses incurred in making or defending a case and is taken out after dispute has arisen

50
Q

What is ATE available for and what is the exception?

A

Available for most types of civil litigation with the exception of family law.

51
Q

What does ATE typically cover in terms of legal fees?

A

covers liability for disbursements and the opponent’s costs, although it is possible to obtain ATE to cover the client’s own legal fees.

52
Q

What is ATE often coupled with and what is the extent of protection it provides?

A

a CFA

However, it’s important to note that a CFA, even when coupled with ATE, may not fully protect the client from liability for the opponent’s costs in the event of losing the case.

53
Q

What is third party funding?

A

involves a commercial funder agreeing to pay some or all of the claimant’s legal fees and expenses in return for a fee

54
Q

In third party funding, where is the fee payable to the funder payable out of?

A

the proceeds recovered from the resolution of the claim (either by judgment or settlement)

55
Q

What is the effect of an unsuccessful claim which was through third party funding?

A

The funder loses its investment and is not entitled to receive any payment

56
Q

What is legal aid?

A

public funding for civil and criminal cases?

57
Q

What is civil legal aid available for?

A

a limited range of cases

58
Q

What must a client satisfy in order to be eligible for civil legal aid?

A

The merits and means test

59
Q

What is the capital limit for civil legal aid?

A

£8000

(£3000 for immigration cases)

60
Q

At what gross monthly income does a client not qualify for legal aid, and are there exceptions?

A

If the client’s gross monthly income exceeds £2,657 (slightly higher for clients with five or more children), they do not qualify for legal aid.

61
Q

What happens if the client’s gross monthly income is £2,567 or less in the income test?

A

The assessment proceeds to make certain deductions reflecting the client’s family circumstances and basic living expenses to determine the client’s disposable income.

62
Q

What is the threshold for monthly disposable income for legal aid qualification?

A

The client qualifies for legal aid only if their monthly disposable income is less than £733.

63
Q

In licensed work, when is legal aid offered to a client and under what conditions?

A

Legal aid is offered if the client’s monthly disposable income is above £315 or their capital exceeds £3,000. However, a contribution towards legal fees will be required from the client.

64
Q

What is the statutory charge under civil legal aid?

A

Any money/damages recovered from the case may be used to repay the legal fees

65
Q

What is free criminal legal aid? (no application required)

A

anyone attending at the police station (either under arrest or voluntarily) is entitled to free legal advice.

66
Q

What is the two-stage test for legal aid applications by a person charged with an offence?

A
  1. Interests of justice test
  2. Means test
67
Q

What does the interests of justice test for criminal legal aid consider?

A

Considers:
* the merits of a case
* the applicant’s previous convictions
* the nature of the offence
* the risk of custody

68
Q

What will make an applicant more likely to qualify for legal aid under the interests of justice test?

A

the more serious the case or consequences

69
Q

What does the means test for criminal legal aid consider?

A

Considers:
* the legal applicant’s household income
* income
* capital
* outgoings

70
Q

What does the means test for criminal legal aid determine?

A

Whether an applicant will be eligible for legal aid and (where they are eligible for a Crown Court trial) if they will be liable for any of their defence costs.

71
Q

The adjusted incomes for the Magistrates and Crown court that will determine whether the client is eligible or not under the means test.

A
72
Q

What is the annual disposable income threshold for clients to be entitled to legal aid under the means test for legal aid entitlement in Crown Court trials?

A

Clients must have an annual disposable income of £3,398 or less to be entitled to legal aid.

73
Q

In Crown Court trials, what happens if a client’s disposable income is more than £3,398 but less than £37,500? (criminal legal aid means test)

A

The means test may determine that the client can afford to make some contribution towards their legal fees, either from income or capital. Legal aid will be offered to the client on that basis.

74
Q

Can a CFA/DBA be made orally?

A

No, it must be in writing

75
Q

Is a CFA/DBA being made in writing sufficient?

A

No it must also be signed by the client

76
Q

What does the full means test in criminal cases consider and what is the threshold for disposable income for the client to be eligible?

A

Considers:
* client’s family circumstances and
* involves the deduction of some essential expenses from the client’s income, such as mortgage repayments or rent
…to produce a figure for the client’s disposable income.

If figure for disposable income per annum is £3,398 or less, they are eligible.

FLK 1 - Legal Services (4 decks)

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