Funding options for legal services

Question 1

What are the funding options for legal services?

Answer 1

• private retainer
• conditional fee arrangements
• damages based agreements
• fixed fees
• legal aid
• third party funding
• legal expenses insurance

Question 2

What is a private retainer?

Answer 2

The client pays the solicitor’s costs themselves and is personally liable for paying the costs. The solicitor’s fees are calculated on the basis of time spent on the client’s case at a set hourly rate

Question 3

What cost information does a solicitor have to give a client with a private retainer?

Answer 3

The solicitor must provide their clients with accurate information about costs at the time of engagement and, as appropriate, as their matter progresses. Solicitors also must give an estimated overall cost for the matter

Question 4

What is a conditional fee arrangement?

Answer 4

An agreement whereby the solicitor’s fee is only payable in specified circumstances. The condition is that the client succeeds in their claim (no win no fee)

Question 5

How is a conditional fee arrangement calculated?

Answer 5

The client will pay more than the solicitor would usually charge so the fee is calculated on the basis of the solicitor’s usual hourly rate plus a success fee

Question 6

What are the limits for how much a success fee in a CFA can be?

Answer 6

It cannot exceed 100% of the solicitor’s charging rate and should be set according to risk. In personal injury cases the success fee is capped at 25% of the general damages awarded

Question 7

If the client wins and has a CFA who is liable to pay the solicitors costs?

Answer 7

If the other party is ordered to pay costs they are only liable to pay the solicitor’s usual hourly rate. The client is liable for the success fee

Question 8

CFAs are only enforceable if certain statutory requirements are met, what are they?

Answer 8

The CFA must be in writing and must state the success fee that will be payable (as a percentage)

Question 9

What is a damage-based agreement?

Answer 9

An agreement whereby a solicitor agrees to receive payment for their services only if the client is successful in their claim and the client obtains a financial benefit

Question 10

Are DBAs capped?

Answer 10

DBAs must be capped at maximum 50% of the damages recovered by the client. This includes Counsel’s fees but not other disbursements so the client will need to pay those too. For personal injury claims the DBA is capped at 25% and in employment cases it is 35%

Question 11

For DBAs to be enforceable they must comply with the relevant provisions of the Courts and Legal Services Act 1990, what are they?

Answer 11

DBAs must be in writing, specify the proceedings to which the agreement relates and detail the payment agreement including when a fee is payable and why the DBA has been set at the level agreed

Question 12

What are the two types of legal expenses insurance?

Answer 12

• before the event insurance
• after the event insurance

Question 13

What is third party funding?

Answer 13

When a third party not connected to the matter agrees to fund the costs of litigation. It may be a union or organisation or a specialist litigation funding company. They usually cover the cost of litigation in exchange fir a fee payable from the money the litigant receives when the case concludes

Question 14

What are the two classes of civil legal aid?

Answer 14

Controlled work or licensed work

Question 15

What controlled work can civil legal aid fund?

Answer 15

Legal help - covers a solicitor giving basic advice/drafting a simple letter
Help at court - covers advice and assistance in respect of a particular court hearing and includes advocacy work

Question 16

What is licensed work under civil legal aid?

Answer 16

Legal representation - available to a client party to proceedings or who is considering starting proceedings. It covers dealing with the client’s case and representing the client. To be able to receive legal representation funding the client must make an application to the LAA

Question 17

What areas is civil legal aid available in?

Answer 17

• some family law proceedings if the client is a victim of domestic abuse
• care proceedings
• cases where the client faces homelessness
• cases where the client has been subjected to discrimination
• immigration cases

Question 18

If the type of case is one where civil legal aid is available, what else must be demonstrated by the client?

Answer 18

That they are eligible for the funding which is assessed on the basis of the merits of the case and the clients financial circumstances

Question 19

What is the merits test for civil legal aid?

Answer 19

The LAA will assess:
- the prospects of success
- cost-benefit

Question 20

What is the merits test for legal help/help at court?

Answer 20

Subject to the ‘sufficient benefit test’ so legal aid will only be available if there is a sufficient benefit to the client, having regard to the circumstances of the case, including the client’s personal circumstances

Question 21

What is the merits test for legal representation?

Answer 21

• it is dependent on the client’s prospects of success. Generally funding will be refused where the prospects of success are assessed at less than 50%.
• where the client’s case involves money, consideration will be given to the amount of damages that are likely to be covered.
• if no money consideration is given as to whether the benefits gained justify the likely cost

Question 22

What is the next stage after the merits test for civil legal aid?

Answer 22

The means test - a client will only be eligible where their capital and income is below £8000 (£3000 for immigration cases). Consideration is also given to a client’s partner’s income and capital if they have a partner. If the client receives any relevant welfare benefit they automatically qualify for legal aid (max disposable income a month £733)

Question 23

When is free legal advice available for criminal cases?

Answer 23

• to anyone attending the police station
• duty solicitor at the magistrates’ court

Question 24

How does a client get legal aid for criminal cases?

Answer 24

They must apply for legal aid and it will only be approved where the client is able to satisfy two tests: the interests of justice test and the means test

Question 25

What is the interests of justice test for criminal legal aid?

Answer 25

It assessed the merits of the case and the client must demonstrate that it is in the interests of justice for them to receive public funding. There are a number of factors that should be considered.

Question 26

What are the factors to be considered for the interests of justice test for criminal legal aid?

Answer 26

• is the defendant likely to lose their liberty or livelihood or suffer serious reputational damage
• will the proceedings involve significant or complex questions of law
• will the individual be able to understand proceedings
• will the proceedings involve interviewing or cross-examination of witnesses on behalf of the defendant
• it is in the interest of another person that the defendant is represented
• any other reason

Question 27

When will the interests of justice test for criminal legal aid be automatically met?

Answer 27

In all cases that are committed, sent or transferred to the Crown Court

Question 28

What is the means test for criminal legal aid?

Answer 28

• anyone under 18 or in receipt of welfare benefits automatically entitled to legal aid
• all other clients need to disclose their financial circumstances
• the initial means test is a basic calculation that determines the client’s adjusted income which determines whether the full test is needed
• full test takes into account personal circumstances and deducts essential expenses to produce the disposable income
• adjusted income £12,475 or less - eligible
• adjusted income between £12,475 and £22,325 - full means test
• adjusted income is £22,325 or above - not eligible for mags and full means for crown