Legal System 8 - Funding options

Question 1

What is a retainer in legal services?

Answer 1

A contractual agreement between a solicitor and client outlining terms of service, work scope, and payment details.

Question 2

How are solicitor fees calculated in private funding arrangements?

Answer 2

Fees are based on time spent at a set hourly rate plus any disbursements (additional costs).

Question 3

What is a fixed-fee arrangement?

Answer 3

An agreement where a solicitor completes work for a set price, agreed upon in advance.

Question 4

What is a Conditional Fee Agreement (CFA)?

Answer 4

A “no win, no fee” arrangement where solicitor fees are only due if the client wins the case.

Question 5

What is a success fee in a CFA?

Answer 5

An additional fee on top of the usual hourly rate, calculated as a percentage, paid only if the client wins.

Question 6

What is the cap on success fees in personal injury cases?

Answer 6

25% of the general damages awarded.

Question 7

Are CFAs enforceable in family law cases?

Answer 7

No, CFAs are not applicable in family law matters.

Question 8

What is a Damages-Based Agreement (DBA)?

Answer 8

A funding option where the solicitor receives a percentage of damages awarded if the client wins.

Question 9

What are the cap percentages for DBAs?

Answer 9

• 50% for general damages
• 25% in personal injury
• 35% in employment cases

Question 10

What is excluded in a DBA that clients may still owe?

Answer 10

Disbursements

Only the solicitor’s and counsel’s fees are covered by the DBA.

Question 11

What is Before-the-Event (BTE) insurance?

Answer 11

An insurance policy added to home or car insurance to cover legal expenses for potential future disputes.

Question 12

What is After-the-Event (ATE) insurance?

Answer 12

Insurance taken out after a legal issue arises, covering legal costs and potential liabilities if the client loses.

Question 13

Who often uses third-party funding?

Answer 13

Commercial clients, especially those in high-value litigation.

Question 14

What is the role of a third-party funder?

Answer 14

To cover litigation costs in exchange for a percentage of the damages awarded.

Question 15

What is legal aid?

Answer 15

Public funding for legal services available to eligible clients in certain civil and criminal cases.

Question 16

What is controlled work in civil legal aid?

Answer 16

Legal help and representation eligibility determined by a solicitor without Legal Aid Agency involvement.

Question 17

What is licensed work in civil legal aid?

Answer 17

Legal representation in complex cases requiring Legal Aid Agency approval through a legal aid certificate.

Question 18

What areas of law typically qualify for civil legal aid?

Answer 18

• Family law where client is victim of domestic abuse
• care proceedings
• client faces homelessness
• client has been subject to discrimination, immigration

Question 19

What are the two main tests for civil legal aid eligibility?

Answer 19

The merits test and the means test.

Question 20

What is the purpose of the merits test in civil legal aid?

Answer 20

To assess the success likelihood and cost-benefit of pursuing the case with public funds.

Question 21

In all cases, the Legal Aid Agency assesses:

Answer 21

• the prospects of success
• cost-benfit

Question 22

What is the sufficient benefit test in the scope of legal aid?

Answer 22

It is a test applied for legal help and help at court.

Legal aid is only avaialble if there is sufficient benefit to the client, having regard to the circumstances of the case and the client’s circumstances.

Question 23

What is the merits test for legal representation in the scope of legal aid?

Answer 23

In general, funding is refused where the prospects of success are below 50%.

Question 24

The Legal Aid Agency my refuse funding as a matter of principle when they believe that…

Answer 24

alternative sources of funding are available to the client (e.g. a CFA)

Question 25

Under the means test, a client is only eligible for legal aid where their capital and income is

Answer 25

below GBP 8,000

(below GBP 3,000 for immigration cases)

Question 26

Who automatically qualifies for legal aid under the means test?

Answer 26

• individuals under 18
• those on specific welfare benefits

Question 27

What financial limits apply to civil legal aid eligibility?

Answer 27

Gross monthly income must be under £2,657, and disposable income under £733 per month.

Question 28

What is the “interests of justice test” in criminal legal aid?

Answer 28

An assessment to determine if public funding is necessary based on case seriousness, legal complexity, and defendant needs.

Question 29

Who is automatically eligible for free legal advice at a police station?

Answer 29

Any individual, regardless of arrest status, has access to free legal advice when at a police station.

Question 30

What is the duty solicitor scheme?

Answer 30

A scheme where solicitors provide legal assistance at police stations or magistrates’ courts for defendants without representation.

Question 31

What eligibility factors are considered in criminal legal aid?

Answer 31

Adjusted income for the means test and potential consequences of the case for the interests of justice test.

Question 32

How does BTE insurance differ from ATE insurance?

Answer 32

BTE is preemptive coverage added to existing policies; ATE is purchased after a dispute arises.

Question 33

Why might third-party funders decline to cover a case?

Answer 33

If the likelihood of success is low, as funders are only paid if the client wins.

Question 34

What role does the Legal Aid Agency (LAA) play in civil legal aid?

Answer 34

It administers legal aid, reviewing eligibility for licensed work cases.

Question 35

What document authorizes solicitors to work under criminal legal aid?

Answer 35

A representation order, granted after eligibility confirmation.

Question 36

How does the success fee differ between CFAs and DBAs?

Answer 36

In CFAs, clients pay success fees directly, while in DBAs, the fee is a set percentage of the damages awarded.