funding options Flashcards
How are solicitor’s fees calculated in private funding?
Solicitor’s fees are calculated based on the time spent on the case at an hourly charging rate, with disbursements and expenses charged separately.
Is the client responsible for solicitor’s fees and disbursements in private funding?
Yes, the client is personally responsible for the solicitor’s fees and disbursements, regardless of the outcome of the case.
What is the nature of a fixed fee agreement between a solicitor and a client?
In a fixed fee agreement, the solicitor agrees to complete the work for a predetermined fee, which may include VAT and disbursements.
Is a fixed fee agreement considered a type of private funding?
Yes, a fixed fee is a form of private funding because the client is personally responsible for paying the solicitor’s charges.
Can a fixed fee be altered after it is set?
No, once a fixed fee is set, it cannot be altered at a later date.
what is a non-contentious business agreement?
A non contentious business agreement is an agreement between a solicitor and client regarding the solicitor’s remuneration for non-contentious work, such as a gross sum, hourly rate, commission, percentage, salary, or other methods.
what is contentious business agreements?
A contentious business agreement is an agreement between a solicitor and client regarding the solicitor’s remuneration for contentious work
=> contentious business is work done in relation to
proceedings.
how is a non-contentious business agreement enforceable?
The agreement must:
(a) be in writing;
(b) be signed by the client;
(c) contain all the terms of the agreement (including whether disbursements and VAT are
included in the agreed remuneration).
What happens if the requirements of a non-contentious business agreement are met?
The client cannot apply to have the bill assessed by the court. However, the court may set the agreement aside or reduce the remuneration if it is found to be unfair or unreasonable.
What must a contentious business agreement comply with to be enforceable?
The agreement must:
(a) State it is a contentious business agreement;
(b) Be in writing;
(c) Be signed by the client;
(d) Contain all the terms of the agreement.
What happens if a contentious business agreement is enforceable
The client cannot apply to court for an assessment of costs, except where the agreement provides for hourly rate remuneration. However, the court may set aside the agreement or reduce remuneration if it is unfair or unreasonable.
What must a solicitor do to enforce a contentious business agreement?
The solicitor must first seek permission from the court to enforce the agreement before suing for unpaid costs.
What is a Conditional Fee Agreement (CFA)?
A CFA is an agreement with a person providing advocacy or litigation services where the fees and expenses are payable only in specified circumstances, such as the success of claim.
How does a Conditional Fee Agreement work regarding payment?
Under a CFA, the solicitor receives no payment or a reduced payment if the case is lost, but receives normal or higher-than-normal payment if the client is successful.
=> ‘no win no fee’
How is the success fee calculated in a Conditional Fee Agreement?
The success fee is typically a percentage of the solicitor’s usual hourly rate. For example, if the usual rate is £200 per hour, a 10% success fee would mean an additional £20 per hour.
What formal requirements must be met for a Conditional Fee Agreement (CFA) to be enforceable?
(a) may be entered into in relation to any civil litigation matter, except family proceedings;
(b) must be in writing; and
(c) must state the percentage by which the amount of the fee that would be payable if it
were not a CFA is to be increased.
=> if conditions not met then CFA invalid - sol cannot claim anything.
What are the limitations on the success fee in a Conditional Fee Agreement (CFA)
The success fee cannot exceed 100% of the solicitor’s normal charges.
In personal injury cases, the success fee is capped at 25% of the general damages recovered
Who pays the success fee in a Conditional Fee Agreement (CFA)?
only the CLIENT - opponent cannot be ordered to my success fee!
What are the financial implications for a client if they lose a case under a Conditional Fee Agreement (CFA)?
If the client loses:
- They will not usually have to pay their own solicitor’s fees.
- They will be liable for disbursements (e.g., counsel’s fees or expert witness costs).
- They may also be ordered to pay the opponent’s costs, including disbursements
What is After-the-Event (ATE) insurance, and how does it benefit the client?
ATE insurance:
- Covers the client’s own disbursements and the opponent’s costs if the client loses the case.
- Protects the client from financial risk of having to pay these costs
What factors should a solicitor consider when conducting a risk assessment before entering into a Conditional Fee Agreement (CFA)?
The solicitor should consider:
- The chances of the client succeeding on liability.
- The likely amount of damages.
- The length of time it will take for the case to reach trial.
- The number of hours the solicitor is likely to spend on the case.
How should a solicitor determine the success fee in a Conditional Fee Agreement (CFA)?
The success fee should reflect the risk assessment and not be set arbitrarily or automatically at the highest level. The solicitor should explain to the client how the risk assessment is reflected in the success fee.
What is a Damages-Based Agreement (DBA)?
A DBA is an agreement where the solicitor is paid only if the client is successful in their claim, and the fee is linked to the level of compensation or damages obtained by the client.
How does a Damages-Based Agreement (DBA) work if the client is successful?
If the client receives financial compensation (e.g., damages), the solicitor’s fee is a percentage of the amount recovered. For example, if the client recovers £100,000 and the DBA is set at 10%, the solicitor would receive £10,000.
