Costs And Funding

Question 1

What are the two types of legal expenses insurance?

Answer 1

Before the event insurance and after the event insurance

Question 2

What is a conditional fee agreement?

Answer 2

An agreement for advocacy or litigation services which provides for the lawyer’s fees and expenses, or any part of them, to be payable only in specified circumstances (no win no fee)

Question 3

What is a success fee in a CFA?

Answer 3

It is a percentage increase in the solicitor’s fees if the case is won

Question 4

What are the statutory caps to success fees in CFAs?

Answer 4

The success fee must not exceed 100% of the solicitor’s base costs and for personal injury claims the success fee must also not exceed 25% of the damages agreed or awarded

Question 5

What happens to the success fee if the case is lost and what happens if the case is won?

Answer 5

If the case is lost, there will be no success fee to be paid. If the case is won, the claimant has to pay the success fee out of their damages.

Question 6

Under a CFA Adi obtains an award of damages of £28000 for design fees and an order for the defendant to pay her costs. At the time the CFA was entered into Adi’s solicitor assessed the prospects of succeeding at 80%. The base charge was £5000. How much is the success fee?

Answer 6

First divide the chances of losing (20%) by the chances of winning (80%) which gives you 0.25 or 25%.

Success fee is £5000 x 25% = £1250

Question 7

What is a damage based agreement?

Answer 7

An agreement for advocacy, litigation or claims management services which provided for payment for the service to be determined by referred to the amount of financial benefit obtained, i.e. the amount of damages

Question 8

What are the caps for DBAs?

Answer 8

Claims not involving personal injury, the payment must not exceed 50% of the sums recovered by the claimant. For personal injury claims the payment must not exceed 25%

Question 9

Can a defendant enter into a DBA?

Answer 9

No, unless they have a counterclaim

Question 10

What is third party funding?

Answer 10

Where a third party provides the financial resources to enable costly litigation cases to proceed. They have no direct interest in the proceedings. If the case is won the funder receives an agreed share of the proceeds. If the case is lost the funder loses its money

Question 11

What is third part funding limited to?

Answer 11

Commercial cases of a high value

Question 12

In order to be granted civil legal aid, an applicant will have to satisfy what?

Answer 12

The merits and means tests

Question 13

What is the indemnity principle?

Answer 13

The party paying costs will never pay more than the legal fees which the receiving party would be obliged to pay their solicitors

Question 14

What are the two bases in which costs will be awarded?

Answer 14

1. Standard basis
2. Indemnity basis

Question 15

What must the costs be to be recovered on a standard basis?

Answer 15

Costs must be reasonably incurred and reasonable in amount and proportionate to the matters issue. Costs that are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred. Doubts as to costs go in favour of the paying party

Question 16

What is the difference between standard basis and indemnity basis?

Answer 16

There is no proportionality requirement for the indemnity basis. Also doubts as to costs go in the receiving parties favour

Question 17

When may a winning party be penalised in costs?

Answer 17

If they unreasonably refused an offer to mediate (or other ADR) or if they failed to respond to an invitation to mediate from the opponent

Question 18

When will the court depart from a party’s last approved or agreed costs budget?

Answer 18

Only where there is a good reason to do so

Question 19

What is qualified one-way costs shifting?

Answer 19

It shifts costs liability from a losing claimant to the defendant

Question 20

What does QOCS apply to?

Answer 20

Personal injury claims and fatal accident cases

Question 21

What is the general rule in personal injury claims for QOCS?

Answer 21

That an order for costs against the claimant can be enforced without court permission only to the extent that the value of the order does not exceed the amount they have recovered in damages, costs and interest. So if the claimant loses and recovers no damages they are not required to pay any of the defendants costs even though a costs order has been made against them

Question 22

What usually happens if a defendant makes a Part 36 offer which the claimant does not accept but then fails to better at trial?

Answer 22

The court will usually make a split costs order. The claimant will be entitled to their costs (plus interest) on the standard basis for the period of the case up until the last day the claimant’s could accept the offer. The defendant will then be entitled to their costs (plus interest) on the standard basis from that date up to and including trial

Question 23

What usually happens if the claimant makes a Part 36 which the defendant does not accept and then at trial the claimant recovers more than their offer?

Answer 23

The court will usually make a split costs order. The claimant will be entitled to their costs (plus interest) on the standard basis for the period of the case up until the last day the offer could be accepted. The court may then reward the claimant and punish the defendant

Question 24

What is a security for costs order?

Answer 24

It offers protection to one party from the risks of the other party not being able to pay litigation costs as it requires that party to pay money into court

Question 25

When will the court conduct a summary assessment of costs?

Answer 25

At the end of a fast track trial after judgment or at the end of an interim application hearing

Question 26

When will a court conduct a detailed assessment of costs?

Answer 26

In multi-track cases