Funding appendix Flashcards
types of financial support to help fund litigation
- legal aid funding
- no win no fee (CFA, DBA)
- insurance
Relevant professional conduct issues
O(1.13) - give information about costs at outset and as matter progresses
IB(1.13), (1.15), (1.16) - ensure he/she has considered with client how client will fund own cost and possibly opposition’s cost (advise on potential liability, and that other side may not be ordered to pay costs or be able to)
WHAT IS LEGAL AID FUNDING
funding for legal cases provided by the government
LASPO 2012
Legal Aid, Sentencing and Punishment of Offenders Act 2012
- changing legal aid to reduce public spending
- LAA replaces Legal Services Commission
- rationale: many claims now taken on by solicitors using ‘no win no fee’ arrangements
LAA = Legal Aid Agency
what is EXCLUDED from legal aid
- ALLEGATIONS OF PERSONAL INJURY OR DEATH (except allegations of clinical negligence in cases of severely disabled infants or there is significant public interest involved)
- CONVEYANCING, BOUNDARY DISPUTES, WILLS, TRUST LAW, DEFAMATION, MALICIOUS FALSEHOOD, COMPANY AND PARTNERSHIP LAW, and other matters arising out of carrying on a business (incl. contract claims)
- EMPLOYMENT CASES, breach of statutory, negligence, consumer cases, education cases
what is iNCLUDED in legal aid
MUST be matter of English law…
- HOUSING MATTERS (where home is at immediate risk)
- JUDICIAL REVIEW
- CERTAIN FAMILY PROCEEDINGS
- CLINICAL NEGLIGENCE claims relating to birth injuries
- Claims AGAINST PUBLIC AUTHORITIES
- MENTAL HEALTH AND IMMIGRATION
will client qualify for legal aid?
IF INDIVIDUAL (so partners in business partnership may be included)
and:
ONE - SUFFICIENT MERIT to be accepted by LAA as care that should be funded
TWO - client must have SUFFICIENTLY LOW MEANS
LEGAL AID - merits test
consider likely prospect of success
- 80% = very good chance of obtaining sucessful outcome
- 60-80 = good chance
- 50-60 = moderate chance
consider:
- will claim win more than is spent
- is alternative funding avaliable (if yes, no LA)
- suitable for small claims?
- any alternatives to litigation (e.g. complaints procedure not exhausted)
- unreasonable to fund case from public purse
Legal aid - means test
Client must be ‘financially eligible to receive legal aid’
- partner’s capital and income is taken into account
- if receive benefits = automatically eligible
- if exceed max. levels = no LA
financial limits
CAP - £8000 (bank, items, equity in prop)
INCOME - £733 per month disposable income
- deduct, income tax, NI, housing costs, child support payment, fixed amounts for each dependent relative and child living with client
types of legal aid
- legal help
- help at court
- legal representation - (1) investigative help, (2) full representation
legal aid - legal help
Providing initial advice and assistance with legal problem
Helps client who might need solicitor in preparing case for court
legal aid - help at court
Allows solicitor to speak on client’s behalf at certain court hearings
BUT not acting formally on their behalf or going on the record in the case
E.g. assisting client on stand-alone hearing rather than doing the entire claim
Not suitable for a final contested hearing
legal aid - help at court (how to qualify)
Satisfy financial conditions
Show that having someone speak on their behalf is (1) reasonable, (2) cost-effective and (3) likely to be of real benefit to them
legal aid - legal representation
allows client to be represented in court
covers preparation for & advocacy at a final hearing in contested proceedings
ONE - investigative help
TWO - full representation
legal representation, (1) investigative help
investigating the strength of the claim
Once investigation complete, claim will either not proceed or an application for full representation (see below) will be made
QUALIFY:
- prospect of success not clear
- investigation likely expensive
- legal help suffices for investigation, if small case
legal representation (2) full representation
Main form of legal representation
All work to trial and beyond may be covered
Funding certificate will limit the terms of work and amount of costs that solicitor can incur
When limit is reached, or about to be exceeded, solicitor will need to apply to LAA for extension of existing limit
statutory charge
if client gains or keeps money/property at end of case - they may have to repay some or all of legal aid costs
if shortfall in recovery of costs (e.g. court orders costs £4000, but LAA costs is £5000) - LAA will exercise its right to apply STATUTORY CHARGE OVER DAMAGES/PROPERTY RECOVERED/PRESERVED (i.e. £1000 from damages)
OR might let client repay legal costs at later date but register charge on home to secure debt with interest charged on this
solicitors should ensure this is explained fully to client (might be that a % or all client’s damages used to pay costs)
no win no fee - two types
if lose - no fee
if win - normal fee AND
CFA - uplift/success fee out of C’s damages
DBA - percentage of damages recovered by C to solicitor
NB. Damages have been increased 10% in claims for contract/tort for non-pecuniary loss to assist claimants in paying sucess fee
CONDITIONAL FEE AGREEMENTS (CFA)
If client loses = no fees
If win = normal or higher fees
if personal injury - success fee cannot exceed 25% of damages (excl. damages for future care and loss)
other cases - success fee can be 100% of basis fee
CFA lawful and enforceable if
satisfies s.58 CLSA 1990
AND any requirements prescribed by Lord Chancellor
(currently contained in CFA Regulations)
CFA - if client wins
pay solicitor:
- basic fee
- disbursements
- success fee
- insurance premium
recover from other side
- yes except:
- success fee (this is paid out of damages unless CFA entered into before 1 April 2013)
- insurance (unless taken out before 1 April 2013 or clinical negligence expert report)
CFA - if client loses
pays
- disbursements
- insurance premium
- other sides cost
- possibly damages (if counterclaim sucessful)
recover from other side?
- nothing
THUS, C may enter ATE insurance (cost of premium not recoverable from other side now, after 1 April 2013)
solicitor should check if client has any BTE insurance (e.g. motor/home) but no need to embark on ‘treasure hunt’
DAMAGE BASED AGREEMENTS
If lose – no fees recovered
If win – recover fees out of damages awarded to client
MAX AMOUNT:
personal injury - 25% of damages (excl. damages for future care and loss)
Emp. tribunal cases - 35%
other cases - 50%
do u need to inform other side of funding arrangements?
NO
- no longer duty to tell other side (because can’t recover success fee and ATE insurance premium from other side)
- BUT must tell if client receives legal aid funding
types of insurance
BTE
ATE
BTE insurance
taken out before client becomes involved in litigation
Provides client with indemnity for the cost of any legal fees incurred as a result of future litigation
- cannot recover premium from other side
- low premium (1% of cover sought)
- might have financial limit
- might stipulate only meet stated proportion of costs
ATE INSURANCE
taken out to help client cover cost of litigation once dispute has already arisen
- often used with CFA
- whether avaliable depends on level of cover required and merits of case
- more expensive than BTE (can exceed 25% of insurance cover sought)
- premium not recoverable if entered after 1 April 2013 from other side
other types of funding
- Private funding (own private resources)
- Professional funding (by Trade Union or professional union)
- Third party funding (often a firm set up for this purpose, to enable parties to bring their case to court – provided by banks, private equity firms, hedge funds)
