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Dispute Resolution > 4: Litigation funding > Flashcards

4: Litigation funding Flashcards

1
Q

When should you initially discuss the issue of costs with your client?

A

At the outset of the case.

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2
Q

What is the usual rule around the winning party’s costs and how they are covered?

A

The usual rule in civil litigation is that the unsuccessful party in proceedings is ordered to pay the successful party’s costs (r44.2).

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3
Q

What does CFA stand for?

A

Conditional fee agreement.

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4
Q

What is a CFA?

A

A conditional fee agreement is an agreement for litigation services where the legal representative’s fees and expenses are payable only if the case is won (s58 CLSA 1980).

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5
Q

Which piece of legislation (and section) deals with CFAs?

A

s58 Courts and Legal Services Act 1980 (CLSA 1980)

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6
Q

Can a CFA be agreed in writing and orally?

A

According to s58 CLSA 1980, the CFA must be in writing only.

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7
Q

What are the conditions that a CFA must comply with if it includes a success fee?

A

According to s58 CLSA 1980, it must state the percentage uplift and that percentage must not exceed the maximum percentage for that type of case.

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8
Q

Who has the authority to change conditions around CFAs?

A

According to s58 CLSA 1980, the Lord Chancellor can prescribe requirements and set limits for percentages around success fees.

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9
Q

Who is eligible for representation as funded by a CFA?

A

Both claimants and defendants.

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10
Q

Which area of legal proceedings cannot have representation funded by a CFA?

A

Family and criminal proceedings.

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11
Q

What would happen if you won the case for your client, who has had representation funded by a CFA?

A

You are entitled to charge an agreed percentage uplift to the base costs (normal hourly rate), i.e. a success fee.

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12
Q

What would happen if you lost the case for your client, who has had representation funded by a CFA?

A

There is no charge to them for the base costs (normal hourly rate) incurred and no success fee is applied. However, they will be charged for disbursements.

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13
Q

What are disbursements?

A

Disbursements are expenses that a firm would have to pay out on behalf of the client, for goods or services provided to the client, on the client’s behalf (e.g. fees for representation of a barrister).

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14
Q

Which 7 issues should be included in the content and terms of the CFA?

A
  1. The client’s responsibilities
  2. The firm’s responsibilities
  3. Details regarding how costs will be dealt with if the client wins their case
  4. Details about payment for advocacy services
  5. What happens if the agreement ends before the claim for damages ends (e.g. death)
  6. What happens after the agreement ends
  7. An explanation of the words used in the CFA
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15
Q

Are there notification requirements for CFAs?

A

Yes, any party entering into a CFA with a success fee that is recoverable from the other side must notify the court and the other parties of the existence of the CFA, but they do not have to reveal the terms until it becomes relevant to any costs assessment.

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16
Q

Which form can be used to provide notice of funding of a case or claim?

A

Form N251, although it isn’t mandatory to serve notice in this way.

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17
Q

What is a success fee?

A

It is a percentage increase in the lawyer’s normal hourly rate fee, which reflects a successful claim.

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18
Q

What is the limit of the percentage of a success fee in most claims?

A

The percentage of a success fee cannot exceed 100% of the usual charging rate.

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19
Q

What is the limit of a success fee in personal injury claims?

A

The success fee in personal injury claims is limited to 25% of the damages for pain and suffering.

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20
Q

What would you take into account when determining the success fee applicable in each case?

A

You would take into account factors such as:
- the complexity of the matter
- the likelihood of success
- the amount of time which the case will involve.

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21
Q

What does DBA stand for?

A

Damage-based agreement

22
Q

What is a DBA?

A

A damage-based agreement is an agreement for litigation services under which if the client wins, they must make a payment to the person providing the services out of their damage payments.

If the client wins, the lawyer will receive a percentage of their damages. If they lose, the lawyer receives nothing.

23
Q

Which piece of legislation (and section) deals with DBAs?

A

s58AA Courts and Legal Services Act 1990 (CLSA 1990)

24
Q

Which piece of secondary legislation regulates DBAs?

A

Damages Based Agreement Regulations 2013 (DBAR 2013)

25
Q

How is a DBA different from a CFA?

A

They are similar in that the legal representative is paid depending on the outcome of the case, but in a damages-based agreement, the lawyer’s fee is not calculated by reference to the work they carried out, but rather by reference to the compensation that has been recovered by the client.

26
Q

How much can a legal representative charge the client under a DBA in most claims?

A

Except of employment and personal injury claims, the costs payable to a legal representative would be limited to 50% of the total damages recovered by the client.

27
Q

How much can a legal representative charge the client under a DBA in personal injury claims?

A

In personal injury claims, the legal representative is limited to 25% of the general damages for pain, suffering and loss of amenity and damages for past monetary losses (e.g. loss of earnings).

28
Q

Are there notification requirements for DBAs?

A

No, there are no requirements to disclose the existence of a DBA. However, there may be tactical reasons for doing so, to indicate your belief in the merits of a case and persuade the other side to settle.

29
Q

With the exception of DBAs in employment matters (where requirements are different), what form must a DBA take?

A

It must:

  • be in writing
  • specify the claim or proceedings to which the DBA relates
  • specify the circumstances in which the representative’s payment, expenses and costs are payable
  • specify the reason for setting the amount of the payment at the level agreed.
30
Q

What six matters did should be provided for in a DBA?

A
  1. A definition of success
  2. How to calculate the representative’s reward
  3. Who pays the disbursements
  4. Whether client or rep is responsible for adverse costs
  5. How to resolve settlement disputes between client and rep
  6. When the client or rep can terminate the DBA
31
Q

If your client won £200,000 in damages and £60,000 in costs and you are able to recover 50% of damages as the legal representative under the DBA, how much would your client pay you?

A

They would pay you £40,000 out of their damages and you would take the £60,000 in costs awarded, as your firm would keep the base costs received from the opponent and set them off against the DBA percentage fee. The client would only be responsible for any shortfall between the costs recovered (60K) and the DBA fee (100K).

32
Q

What is QOCS?

A

Qualified one-way costs shifting (QOCS), which is relevant to personal injury matters, where the claimant will not be required to pay the defendant’s costs if the claim fails, but the defendant must pay the claimant’s costs in the usual way if the claim succeeds.

33
Q

What are the two practices on which a retainer can be based upon?

A
  1. Hourly charging rate for the time spent on a matter.
  2. Fixed fee for the work
34
Q

If a retainer is based upon a fixed fee subject to amendment, at which two points must these changes be communicated to the client?

A

The circumstances in which any change may apply must be explained very clearly to the client in writing at the outset of the retainer, and at the point where the circumstances start to apply - not just at the end of the case.

35
Q

What is the RTA Protocol?

A

The pre-action protocol for low value personal injury claims in road traffic accidents.

36
Q

What is third-party funding?

A

When funding is provided by someone who is not party to that dispute in exchange for an agreed return. It usually covers the funded party’s legal fees and expenses.

37
Q

What kind of institutions now provide third-party funding?

A

In addition to specialised third-party funders, insurance companies, investment banks, hedge funds and law firms have entered the market.

38
Q

What other name is third-party funding also known as?

A

Litigation finance.

39
Q

What is portfolio funding?

A

Where funders provide a funding package that covers a portfolio of cases.

40
Q

What is litigation crowdfunding?

A

Where individual investors can fund litigation and receive a proportion of the proceeds (comprising of costs and damages) according to their level of investment if the case is successful.

41
Q

What is the name used for the individual or business seeking funding in litigation crowdfunding?

A

The ‘initiator’.

42
Q

What is the name used for the individuals or businesses who decide to fund the campaign in litigation crowdfunding?

A

The ‘investors’.

43
Q

What is the name used for the company which brings together the initiators and the investors in litigation crowdfunding?

A

The ‘platform’.

44
Q

In litigation crowdfunding, what will the platforms usually receive?

A

A percentage of funds pledged to cover their operating costs.

45
Q

What is public funding for civil litigation called and who is it dispensed by? Is it common?

A

Legal aid, dispensed by the Legal Aid Agency. It is quite uncommon nowadays.

46
Q

In which circumstances would a debt or contract case qualify for legal aid?

A

If an individual’s home is at immediate risk of sale or repossession
OR
If an individual faces eviction from their home, perhaps due to bankruptcy proceedings.

47
Q

What are the two types of legal aid in civil proceedings?

A

Legal help: providing advice and assistance, and initial work up to a cost limit.

Legal representation: preparing the case and speaking in court on the client’s behalf.

48
Q

What two tests are used to determine whether the client qualifies for legal aid?

A

Means test and merits test.

49
Q

What will be considered in relation to whether a claim passes the two tests?

A
  1. Whether it can be dealt with ADR, e.g. mediation
  2. Whether it can be funded in any other way, e.g. insurance or CFA
  3. Whether it justifies the spending of public money, e.g. would a reasonable person of private means fund the case?
50
Q

What type of cases is usually excluded from public funding?

A

Most cases involving personal injuries caused by negligence.

Dispute Resolution (20 decks)

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