Funding Options Flashcards
chapter 7
What is a retainer in the context of legal services?
A retainer is the contractual relationship between a solicitor and a client. It must specify the fees and charges the solicitor will levy and how they will be paid.
What are the key professional conduct obligations regarding client costs?
Solicitors must provide the best possible information about pricing, likely overall costs, and any incurred costs. They must act in the client’s best interests and with integrity, avoiding excessive charges.
What is private funding for legal services?
The client pays the solicitor’s fees based on time spent at an hourly rate, plus separate charges for disbursements and expenses. The client is responsible for these costs regardless of the case outcome.
What is a fixed fee arrangement?
The solicitor agrees to complete the work for a set fee, known in advance, with the client being personally responsible for payment. The fixed fee cannot be altered later unless the client agrees.
What is the difference between contentious and non-contentious business?
Contentious business is work done for the purposes of proceedings in court or arbitration, once proceedings have been issued. Non-contentious business is any other work done by a solicitor, such as conveyancing.
What are the requirements for a non-contentious business agreement to be enforceable?
The agreement must be in writing, signed by the client, and contain all the terms, including whether disbursements and VAT are included.
What are the requirements for a contentious business agreement to be enforceable?
The agreement must state it is a contentious business agreement, be in writing, signed by the client and contain all the terms. The solicitor must also seek court permission to enforce the agreement.
What is a Conditional Fee Agreement (CFA)?
A CFA is an agreement where the solicitor’s fees are payable only in specified circumstances, usually depending on whether the client wins or loses. It often involves a “no win, no fee” arrangement with an enhanced fee (success fee) for a win.
How is a success fee in a CFA calculated, and what are the limits?
The success fee is a percentage increase of the solicitor’s usual hourly rate, not based on damages received. It cannot exceed 100% of the normal charges, or 25% of general damages in personal injury cases.
What is a Damages-Based Agreement (DBA)?
A DBA is an agreement where the solicitor’s fee is a percentage of the damages the client receives. If the client loses, the solicitor receives no fee.
What are the caps on fees in a DBA?
The fee cannot exceed 50% of the sums recovered by the client, inclusive of VAT and counsel’s fees (but not other disbursements). Lower caps exist for personal injury (25%) and employment cases (35%), but these do not apply to appeals.
What is before-the-event insurance (BTE)?
BTE is an existing insurance policy (often part of household or motor insurance) that may cover legal fees. Solicitors should check if a client has such coverage.
What is after-the-event insurance (ATE)?
ATE is insurance taken out after a dispute has arisen to cover legal expenses. It usually covers the client’s disbursements and the opponent’s costs.
What is third party funding?
A third party (often a commercial funder) who has no other connection to the case, agrees to fund the litigation costs in return for a fee payable from money recovered by the litigant at the end of the case.
What is the basic distinction between solicitor-client costs and costs between the parties in litigation?
Solicitor-client costs are the fees the client has agreed to pay their own solicitor. Costs between the parties are the costs a court may order one party to pay to the other.
