Funding of Legal Services Flashcards
Private Funding
Solicitor’s fees are calculated according to time spent on the case at a given hourly charging rate. Client is personally responsible for solicitor’s fees and disbursements irrespective of the outcomes of the case
Fixed fees
Similar to private funding as client is personally responsible for paying the solicitor’s charges but with a fixed fee the amount charged is known at the outset. Cannot be altered at a later date unless the client agrees. if the client refuses the solicitor must complete the work for the fee agreed
Funding civil litigation - General rule
If the client loses the case the client will usually have to pay their own solicitor’s costs and their opponent’s costs. And if the client wins the case they will still be responsible for their own solicitor’s costs.
Funding civil litigation - Variable fees
Where the fee varies according to the outcome. 2 types:
1) Conditional fee agreement
2) Damages-based agreements
Funding civil litigation - Variable fees - Conditional fee agreement
‘No win, no fee’ agreement. The client pays a different amount for the legal services received depending on the outcome of the case. The solicitor receives no payment or less than normal payment if the case is lost but receives normal or higher than normal payment if client is successful. Higher fee is expressed as a % of hourly charge.
Funding civil litigation - Variable fees - Conditional fee agreement - requirements
1) May be entered into in relation to any civil litigation matter except family proceedings
2) Must be in writing
3) Must state the % by which the amount of the fee would be payable
4) Success fee cannot exceed 100% of solicitor’s normal charges
5) In personal injury cases there is an additional cap of 25%
Funding Civil Litigation - Variable fees - Conditional fee agreement - who pays what
If the client wins the case and the opponent is ordered to pay the client’s costs these cannot include the success fee.
Therefore if the client loses the case whilst they will not usually have to pay their own solicitor’s fees they will be liable for disbursements such as counsel’s fees or costs of an expert witness and their opponents costs including their disbursements.
Funding civil litigation - Variable fees - Conditional fee agreement - Risk assessment
A solicitor should always conduct a risk assessment taking account of such factors:
1) The chances of the client succeeding on liability
2) The likely amount of the damages
3) The length of time it will take for the case to reach trial
4) The number of hours the solicitor is likely to spend on the case
Funding civil litigation - Variable fees - Damages-based agreement
It’s an agreement in which the solicitor agrees to receive payment for their services only if the client is successful in their claim and the amount of the solicitor’s fees is linked to the level of damages. If the client receives damages the solicitor’s fee is an agreed % of the damages - contingency fee.
Funding civil litigation - Variable fees - Damages-based agreement - Who pays what
If the client loses the case the solicitor does not receive a fee and the client will have to pay their own disbursements and opponents costs. If the client wins, any costs to be paid by the opponent will be set off against the contingency fee and the client will only have to pay the balance.
Funding civil litigation - Variable fees - Damages-based agreement - Requirements
1) DBA must not provide for a payment above an amount which is equal to 50% of the sums ultimately recovered by client
2) For personal injury cases this is 25%
3) For employment cases this is 35%
4) The agreement must be in writing
5) It must specify the proceedings to which the agreement relates
6) It must specify the circumstances in which the fee is payable
Funding civil litigation - Legal expenses insurance - Before the event insurance - Definition
An insurance policy which covers payment of their solicitor’s fees.
Funding civil litigation - Legal expenses insurance - Before the event insurance - What cases its commonly purchased for
Commonly purchased as part of household or motor insurance polices. Motor insurance will cover aspects of the vehicle ownership and household insurance will cover expenses involved with one or more of: ownership of the property, employment, personal injury, sale of goods and supply of services.
Funding civil litigation - Legal expenses insurance - Before the event insurance - Litigation matters
Solicitor should establish whether any insurance policy covers the client’s liability for another party’s costs. If not it may be possible for the client to purchase after-the-event insurance to cover liability
Funding civil litigation - Legal expenses insurance - Before the event insurance - Accepting claim
Insurer must accept the claim for client to take advantage of policy. The insurer may not accept claim if it does not have a good prospect of success (generally need more than 50%)
Funding civil litigation - Legal expenses insurance - After the event insurance - Definition
Covers legal expenses incurred in making or defending a claim. it usually covers liability for disbursements and the opponent’s costs and therefore it is insurance taken out after the dispute has arisen. It will be specific to the case.
Funding civil litigation - Legal expenses insurance - After the event insurance and conditional fee agreement
Often couple with conditional fee agreement which does not protect the client from liability for the opponent’s costs in the event of losing the case.
Funding civil litigation - Legal expenses insurance - After the event insurance - Accepting the claim
Will only be offered where the insurer is confident in the success of the case (means 60% chance of success).
Funding civil litigation - Legal expenses insurance - After the event insurance - Cost
The client will bear the cost of taking out ATE as premium if not recoverable from the other side by way of costs. The premium payable will depend on the strength of the client’s case and the level of cover required.
