Unit 4

Question 1

What are the formalities for a non-contentious business agreement?

Answer 1

Agreement must be:

1) In writing;

2) Be signed by the client

3) Contain all the relevant terms of the agreement (including whether disbursements and VAT are included in the agreed remuneration).

Question 2

For contentious business agreements, what are the formalities?

Answer 2

To be enforceable, the agreement must comply with certain requirements, including:

(a) The agreement must state it is a contentious business agreement;

(b) The agreement must be in writing;

(c) The agreement must be signed by the client; and

(d) The agreement must contain all the terms.

Question 3

Where the formalities have been complied with can the client apply to the court for an assessment of costs?

Answer 3

No.

Question 4

What is a conditional fee agreement?

Answer 4

Under a CFA, a solicitor recieves no or lesser remuneration if the case is lost bus receives normal or higher than normal where the client is successful.

Question 5

In the CFA how is the success fee / higher fee calculated?

Answer 5

• The fee is not based on the solicitor receiving any proportion of money recovered by the client. Instead, it is based on the solicitor’s normal hourly charging rates (e.g., if a solicitor would usually charge £200 an hour, a 10% success fee would mean an additional £20 per hour).

– Solicitor must consider the risks of the case.

Question 6

What are the limitations on the success fee for a CFA?

Answer 6

• Success fee cannot exceed 100% of the solicitors’ normal charges.
• In personal injury cases, there is an additional cap of 25% of the general damages recovered.
• NOTE – If the client wins the case and the opponent is ordered to pay the client’s costs, theses cannot include the success fee. The success fee is always payable by the client.
• It is possible for disbursements to be included as part of the agreement. However, most firms exclude disbursements.

– If the firm’s contract has excluded disbursements, i.e., counsel’s fees or the costs of an expert witness, if the client loses the case, they will be liable for these.

– If the client loses, they will also be ordered to pay the opponent’s costs, including disbursements.

– Suitable to combine a CFA with ATE insurance cover.

Question 7

What are the formal requirements of a CFA?

Answer 7

(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.

Question 8

What is a damages based agreement? (DBA)

Answer 8

Damages based agreement = an agreement where the solicitor agrees to receive payment for their services only if the client is successful in their claim; and the amount of the solicitors’ fee is linked to the level of compensation/damages obtained

Question 9

How is the contingency fee calculated on the DBA?

Answer 9

• If the client receives a financial benefit (usually in the form of damages paid by the opponent), the solicitor’s fee is an agreed percentage of the compensation received.
• The payment is contingent upon success.
• If client loses the case, the solicitor does not receive a fee.
• The amount paid by the client to the solicitor will be net of any costs payable by the opponent. I.e., any costs to be paid by the opponent will be set off against the contingency fee and the client will only have to pay the balance.
• If the client loses the case, the effect is similar to a CFA. The client will not be responsible for their own solicitors’ fees, but may still be liable for the disbursements as well as, usually, having to pay the opponent’s costs.

– Solution to this = may be appropriate to combine a DBA with ATE insurance cover.

Question 10

What are the limitations on the DBA’s contingency fee?

Answer 10

• DBA must not provide for a payment above an amount which, including VAT, is equal to 50% of the sums ultimately recovered by the client.
  – This is inclusive of counsel’s fees, but not other disbursements for which the client will remain liable.

– The cap does not apply to appeal proceedings.

• Personal injury cases = 25% of general damages received for pain, suffering, and loss of amenity and damages for pecuniary loss (other than future pecuniary loss).
• Employment = Cap is 35%. This cap does not apply to appeals.

Question 11

What are the formal requirements of a DBA?

Answer 11

1. DBA must be in writing and;
2. Specify the proceedings to which the agreements relates
3. Specify the circumstances in which the fee is payable and;
4. The reason for setting the fee at the level agreed.

Question 12

What is the effect if the DBA is judged to be unenforceable by the judge?

Answer 12

Client doesn’t have to pay anything.

Question 13

Summary between CFAs and DBAs

Answer 13

• Enhanced rate is calculated by reference to an uplift in the solicitors’ usual hourly charging rate in CFAs but is liked to damages received in DBAs.
• Success fee is limited to 100% of the usual hourly rate in CFAs; but the contingency fee cannot exceed 50% of damages in DBAs.
• In both arrangements, the client is not required to pay their solicitors’ fee if the case does not succeed, or pays a lesser amount depending upon agreement.
• Neither CFAs or DBAs cover client’s own disbursements, or the opponent’s costs, which must be dealt with separately.
• Both must be in writing.
• Availability and terms of these funding arrangements will reflect the infinite variety of cases and the inherent difficulties of predicting the outcome of litigation.

Question 14

Does after the event insurance apply to family law?

Answer 14

No.

Question 15

When are ATEs offered?

Answer 15

Where the insurer is confident in the success of the case (usually 60% chance of success)

Question 16

Disadvantage of ATE?

Answer 16

Exepnsice.

Question 17

Who bears the costs of taking ATE?

Answer 17

Client. The premiuimm is not recoverable from the other side by way of costs.

Question 18

What do commercial litigation funders not fund?

Answer 18

1) Personal injury
2) Consumer cases

Question 19

When do commercial funders fund?

Answer 19

when there is 60% chance of success.

When the size of the award allows for payment of the funder.

Question 20

How do commercial funders recover their fees?

Answer 20

From the amount recovered by the client.

Question 21

Does the solicitor have a separate duty to the Legal Aid Agency?

Answer 21

Yes. E.g., must inform the LAA if the client acts unreasonably (e.g., refuses a reasonable settlement) or has given inaccurate or misleading information to the LAA. .

Solicitors’ duty to LAA overrides their duty to confidentiality to the client.

Question 22

What are the 2 types of civil legal aid?

Answer 22

1. Controlled work – It is for the solicitor to determine the client’s eligibility.
2. Licensed work – It is for the Legal Aid Agency to determine/ authorise the client’s eligibility on a case-by-case basis.

Question 23

What types of civil services are available for controlled and licensed work?

Answer 23

1. Legal Help

• Covers the solicitor giving basic advice and limited steps following on from that advice.
• Could involve letter drafting, obtaining info from a third party.
• Does not extend to issuing court proceedings.
• Legal help = controlled work.

2. Help at Court

• Covers advice and assistance, including advocacy.
• Must be in relation to a particular hearing rather than representation in the case generally.
• Help at court = controlled work.

3. Legal Representation

• Available to a client who is a party to proceedings or who is contemplating starting proceedings.
• Can cover the conduct of the client’s case, if necessary, up to and including representation before the court.
• Legal representation = licensed work.

 Application must be made to the LAA. If successful, LAA issues a legal aid certificate.

• Legal representation can be granted on investigative or full basis.
• Investigative basis = Covers the solicitors’ work in assessing the strength of the case.
• Full basis = Covers the issuing and conduct of the proceedings, including advocacy at the final hearing.

 LAA usually places restrictions on the representation which can be given (costs wise) setting out the maximum fees.

 If case requires more work, the solicitor must apply for an amendment to the certificate and/or an increase of the costs limitation.

Question 24

What are the limits to legal aid?

Answer 24

– Legal aid not available for negligence claims for personal injury, divorce and family disputes about children.

– Legal aid not available for matters arising out of the ‘carrying on of a business’, including claims brought or defended by sole traders.

– Legal aid not available for cases that could be financed by a conditional fee arrangement (CFA).

Question 25

Where the case falls outside of the scope of legal aid and is exceptional can it still be granted?

Answer 25

• Where the case falls outside the scope of legal aid, it may still be available where the client’s circumstances are exceptional.
• Legal aid will be granted in any cases where the LAA is satisfied that there would be a breach of the client’s human rights and where the interests of justice require. High threshold.

Question 26

What are the 2 things to conisder if a case does fall within the scope of legal aid?

Answer 26

1) Merits of the case and

2) Client’s financial circumstances

Question 27

How does the LAA consider the merits of a case?

Answer 27

1) Sufficient benefit test

• Legal help + help at court = subject to the ‘sufficient benefit test’.

– 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, to justify the work being carried out.

2) Prospect of success test

• Legal representation = Dependent on the client’s prospects of success.

– Representation will not be granted if those prospects are assessed at less than 50%.

– Additionally, the client must satisfy a general merits test or a specific merits test depending on the type of case.

– Monetary case = the merits test will involve a balancing of the damages that are likely to be received against the likely costs involved in the case.

– Non-monetary case = the test is whether the benefits to be gained justify the likely cost such that a reasonable privately paying client would be prepared to proceed (the reasonable privately paying client test).

• Legal representation will be refused where the LAA believes there is other funding available to the client, or if the case is suitable for a CFA (conditional fee arrangement).

Question 28

What is the means test for Legal Aid (non criminal)

Answer 28

• A client will only qualify for legal aid if their capital income (combined with the resources of any partner) does not exceed the set limits.

Limits:

• Capital limit = £8,000 (£3,000 for immigration cases).

 If the client has capital of more than £8,000, they do not qualify and there is no need to consider the client’s income position.

• Income limit = £2,657 in gross monthly earnings. Any above and the client does not qualify for legal aid.

 If the client’s monthly income is £2,567 or less the assessment makes deductions based on the family’s living expenses to work out their disposable income.

 If their monthly disposable income is less than £733, they will be eligible for legal aid.

 Where clients are in receipt of welfare benefits (universal credit, ongoing entitlement to income support, income-based job seeker’s allowance, income-related employment and support allowance, guarantee credit element of pension credit) they automatically qualify for legal aid on the basis of income, but their capital must still be assessed.

• Even where the client satisfies both tests, the means assessment can still show they are able to pay something towards their legal costs.

 For licensed work, if the client’s monthly disposable income is above £315 or their capital is above £3,000, legal aid will be offered to the client on the basis that they can make a contribution towards their legal fees.

 If the contribution is from income, it will take the form of monthly payments.

Question 29

If a client is in receipt of welfare benefits what is the effect on their means test?

Answer 29

Where clients are in receipt of welfare benefits (universal credit, ongoing entitlement to income support, income-based job seeker’s allowance, income-related employment and support allowance, guarantee credit element of pension credit) they automatically qualify for legal aid on the basis of income, but their capital must still be assessed.

Question 30

What is the statutory charge in relation to legal aid?

Answer 30

Statutory charge = If the client benefits financially from the case, any money or property the client receives can be used in repayment of the solicitor’s fees.

• For statutory charge to apply, the client must have been wholly or partly successful in the proceedings or obtained an out-of-court settlement which resulted in the client gaining or keeping money/property.

– Usually, for statutory charge to apply, the client must have been in receipt of legal representation.

• LAA will claim any money paid pursuant to a costs order made in the clients’ favour. If there are shortfalls, LAA retains any contribution paid by the client under the terms of the offer of legal aid. If there is any deficit, any money recovered or preserved in the proceedings will be applied to make up the shortfall.

Question 31

Can the statutory charge be applied to the client’s home? (when the property recovered is their home)

Answer 31

Yes.

– Where the property recovered is the client’s home, the LAA may agree to postpone enforcement of the statutory charge.

– The statutory charge is then protected by a register against the title of the property. Simple interest is applied, and fees will be recouped when the property is eventually sold.

– Client should be advised ‘periodically’ as to the costs incurred to date under the statutory charge.

Question 32

What is the rule for advice at the police station (entitlement to legal aid)?

Answer 32

• Anyone attending the police station (whether under arrest, or attending voluntarily) is entitled to free legal advice, irrespective of their means.
• Solicitor will claim for the work done under the Police Station Advice ad Assistance Scheme.

– Solicitor receives a single fixed fee regardless of the nature of the case or time actually spent.

Question 33

Can a solicitor at the police station refuse instructions on the basis that to do so would be unremunerative?

Answer 33

No.

Question 34

For criminal legal aid what are the two tests the client needs to satisfy?

Answer 34

1) Interests of justice test

2) Means test

Question 35

What are the key features of justice test?

Answer 35

Assesses the merits of the case.

• Client must demonstrate that it is in the interests of justice for them to receive public funding to cover the cost of their legal representation.

The following factors are considered:

(a) Whether the individual would, if any matter arising in the proceedings is decided against them, be likely to lose their liberty or livelihood or suffer serious damage to their reputation;

(b) Whether the determination of any matter arising in the proceedings may involve consideration of a substantial question of law;

(c) Whether the individual may be unable to understand the proceedings or to state their own case;

(d) Whether the proceedings may involve the tracing, interviewing or expert cross-examination of witnesses on behalf of the individual; and

(e) Whether it is in the interests of another person that the individual be represented.

Catch all provision – Where the client can demonstrate that there is ‘some other reason’ making it in the interests of justice for them to receive legal aid, they satisfy test 1.

Note – the more serious the consequences for the client or the more complex the proceedings, the more likely it is the client will satisfy the test.

Question 36

When is the interests of justice test automatically satisfied?

Answer 36

The test is automatically met if the client is under 18 years of age and in the case of crown court trials.

Question 37

What are the key features of the means test?

Answer 37

All other clients need to submit full details of their financial circumstances.

a) Adjusted income calculation.

• This takes the client’s gross annual income and divides it by a set figure according to whether the client has a partner or children.
• If the adjusted income is £12,475 or less, the client will be eligible for legal aid at both magistrates’ court and the crown court.

– If the adjusted income is £22,325 and above are not eligibel for legal aid.

b) Disposable income calculation

• Clients whose adjusted income is above £12,475 are then subject to the ‘full means test’ i.e., their disposable income is calculated which takes into account the client’s family circumstances and deducts essential expenses.
• Magistrates = To be entitled to legal aid, the client must have an annual disposable income of £3,398 or less.
• Crown Court = If a client has a disposable income of more than £3,398 and less than £37,500, the means test may determine that the client can make some contribution towards their legal fees, whether from income or capital, and legal aid will be offered to the client on that basis.

Question 38

Who automatically is excluded from having to satisfy the means test?

Answer 38

• Clients under 18
• Clients who receive welfare benefits

Question 39

What is a representation order (in relation to legal aid)?

Answer 39

• Successful application for criminal legal aid results in a representation order being issued and sent to the solicitor.
• Representation order = confirmation that the solicitor may start incurring legal costs on the client’s behalf which will be covered under the legal aid scheme.
• Terms of the representation order can be extended, to cover costs of an appeal.