Funding Options Flashcards
What is the retainer?
Contract between solicitor and client which agrees fees at the outset.
It is subject to certain statutory controls, swell as those imposed by the SRA.
Explain the provision of para 8.7 of the SRA Conde of conduct for solicitors.
Solicitor must give the client best possible information about fees at the start of the matter, and keep them updated as to fees as the matter progresses, as well as information about the likely overall cost of a matter and many coasts incurred.
Give an examples of where a solicitor must provide particular costs information in accordance with the SRA transparency rules.
includes circumstances where the client may have to make payments themselves for the services provided by the solicitor, including payments from any damages they receive through litigation.
Which SRA principles could excessively charting a client breach?
- Principle 5 to act with integrity; and
- Principle 7 to act in the best interests of the client.
When would the court reduce a bill?
The court will reduce a solicitor’s bill for the client if they are satisfied the amount charged is unreasonable.
This is likely to be in the form of litigation (as it is unusual for a bill to be challenge to such an extent in a non-contentious matter).
Who generally assesses a solicitor’s bill in a non-contentious matter when the client challenges it?
A costs officer.
When assessing the bill, if they reduce the amount the costs by more than 50% they must inform the SRA.
Is there an obligation for solicitors to offer alternative funding options or agree to act for a client under an alternative funding option?
No.
What should a solicitor do if they think a client is eligible for legal aid?
They are under no obligation to offer legal aid themselves, but if they assess the client may be eligible the solicitor must advise the client accordingly and where necessary point them in the direction of such legal aid.
What does para 3.4 of the SRA code of conduct for solicitors provide?
Requires solicitor to take into account t the client’s attributes, needs and circumstances.
This requirement applies when selecting and agreeing appropriate funding option in the client’s case.
Explain private funding by hourly rate.
Client may choose to fund solicitor’s fees privately (or may not have any other option).
Usually, fees are calculated at an hourly rate, and client is told which fee earners will be working on the file at the start of the matter. Ultimate cost is therefore open ended depending on how much time is spent.
Solicitor is still under duty to give the client the best possible information they can.
Client is personally responsible for the fees and disbursements regardless of the outcome of the case.
Explain fixed fees.
Common in conveying transactions.
Client personally responsible.
Fixed fee is subject to plus VAT and disbursements.
Fixed fee can only be changed if the client agrees.
Solicitor cannot alter the fee without client consent just because the work turns out to be more expensive than they planned.
Explain the decision in Inventors Friend Ltd v Leather Prior.
Where solicitors undertake to work at a specific fee, they are generally speaking obliged to complete it exercising the ordinary standard of care (even if it has become unremunerative).
How is contentious business defined in the solicitors act 1974?
Defined as ‘business done, whether as a solitaire or an advocate, in or for the purposes of proceedings begun before a court or arbitrator, not being a business which falls within the definition of non-contentious business or common form probate business’.
Note contentious business only starts once proceedings have been issued.
How is non-contentious business defined?
Any business done as a solicitor which is not contentious business.
Explain non-contentious business agreements.
an agreement in respect of solicitor’s remuneration for any non-contentious work.
Solicitor may be remunerated a gross sum, commission, percentage, salary or otherwise.
To be enforceable it must comply with s57 Solicitors Act 1974, and therefore must:
1) be in writing;
2) signed by the client; and
contain all agreed terms (specifically whether disbursements and Vat are included in the agreed remuneration).
Can a non-contentious business agreement be challenged in court?
If provisions of s57 are complied with, it cannot be challenged in court.
Court may however set the agreement aside or reduce the remuneration, if amount charged by solicitor is unfair or unreasonable.
Explain contentious business agreements.
May provide for solicitor to be remunerated by gross sum, hourly rate, salary or otherwise.
Solicitor CANNOT be remunerated by contingency fee in a contentious business agreement.
What requirements need to be compiled with for a contentious business agreement to be binding?
1) agreement must state it is a contentious business agreement;
2) agreement must be in writing;
3) agreement must be signed by the client; and
4) agreement must contain all of the terms.
Can a contentious business agreement be challenged in court?
If the agreement is enforceable it cannot be challenged in court for an assessment of costs unless the agreement provides the solicitor is to be remunerated by hourly rate.
Court may choose to set aside/ reduce remuneration if unfair or unreasonable.
What happens if the client wins their case and the opponent is ordered to pay their costs?
The client must still pay the solicitor their own costs directly, and then seek the payment from the other side in accordance with the court’s assessment.
It is possible the client recovers less from the opponent than they have to pay to their own solicitor, but this will depend on the award of the court.
In contentious work, what must the solicitor explain to the client?
The difference between costs paid to the solicitor, and the costs which may be awarded between the parties at the end of the case.
If client loses the case, usually they will need to pay their own costs, and also the opponents costs.
What are the two types of variable fee agreements?
Conditional fee agreements and damages-based fee agreements.
What is a conditional fee agreement?
Defined by s58 Courts and Legal Services Act 1990 as and agreement with a person providing advocacy or litigation services which provides his fees and expenses, or any part of them, to be payable only in specified circumstances.
The specified circumstances are whether or not the client wins their claim (ie successfully succeeds in brining a claim or defending a claim).
How is the enhanced fee the solicitor receives under a CFA determined?
Higher fee payable must be expressed as a percentage increase of the fee that would be payable if there was no CFA.
Fee payable is usually based on solicitors hourly rate (eg if sol is billed at £200 per hour, 10% success fee would mean additional £20 per hour).
