Funding Information
Clients who wish to instruct us can do so using a variety of funding methods. The appropriate funding option depends on individual circumstances and the matter that we are dealing with, as not all cases are suitable for all funding methods and not every client will be suitable for a particular method of funding. Below are some of the most common funding methods. This information is provided on a generic basis only and should not be considered as legal advice.
Fixed Fee Agreements
Work undertaken on a fixed fee agreement is self-explanatory. The fee agreed with you is the fee we charge for the work agreed. We can charge on this basis in certain cases because we are able to estimate the amount of time required to undertake the work. However, there may be situations where we charge an additional fee to the agreed fixed fee, for further work not anticipated at the outset. Any additional charges to the fixed fee will be explained and agreed with you prior to us carrying out any additional work.
Most immigration matters can be undertaken on a fixed fee basis.
Conditional Fee Agreements (CFA)
A Conditional Fee Agreement is an agreement whereby a solicitor and a client agree to share the risk of the litigation by coming to a financial arrangement where part, or sometimes all, of the solicitors’ fees will only be payable by the client in the event of success.
Conditional Fee Agreements are generally used in Personal Injury cases, but can also be used in other cases such as disputes and litigation.
CFA’s do not require any legal fees to be paid upfront, but include a provision for the client to pay a “success fee” upon condition(s) being met. The condition(s) are usually that we ‘win’ the case and means that we succeed in recovering damages (compensation) on your behalf, or we achieve a result as agreed within the conditional fee agreement which triggers the payment of a “success fee”.
The amount of “success fee” is represented as a percentage of our basic charges and cannot be more than 100% of our basic charges. Upon success you are normally required to pay our basic charges plus the success fee together with any expenses or disbursements incurred. Some or all of these costs may be recovered from the losing party if you do succeed.
The level of success fee is based upon the solicitors’ assessment of the risk of not achieving the predetermined defined success criteria. To determine prospects of success, solicitors will consider all relevant factors, including the merits and value of the claim; the likelihood of settlement; the level of costs likely to be incurred; whether the case is heavily dependent upon factual or uncertain expert evidence, and the information and documentation available when the CFA is entered into.
Where you are not entitled to recover costs from the losing party but you do ‘win’, you become liable for our legal costs, success fee, expenses and disbursements. However, the maximum we are able to charge you in personal injury cases is 25% of the damages you receive (not as a percentage of our basic charges).
The client is primarily liable for the payment of all CFA fees, including the success fee where the agreement was entered into on or after 01 April 2013. Some barristers may enter into conditional fee agreements and if so, the client will be liable for barrister fees.
If the case does not result in a ‘win’, you will not be required to pay our legal costs except in certain circumstances. However, you may be required to pay the legal costs of the other party, as well as any disbursements incurred.
Conditional Fee Agreements cannot be used to fund criminal cases and nor any family or matrimonial proceedings.
Legal costs if you lose
Personal Injury cases, cases that fall under the Fatal Accidents Act 1976 and claims made by an estate of a deceased person, have the benefit of Qualified One-way Costs Shifting (QOCS). This limits the other side’s legal costs you might otherwise have to pay where you lose your claim.
The costs protection QOCS offers to personal injury claimants will not apply where the claim as been struck out by the Court in certain cirumstances, or where:
- The claim is found to have been fundamentally dishonest
- The claim is made for the financial benefit of a person other than the claimant or a dependent.
- The claim is made for the benefit of the claimant other than a claim to which the QOCS regime applies.
Damages-Based Agreement (DBA)
Work undertaken on a damages-based agreement does not require legal fees to be paid upfront. Instead, we work on the basis that we take a percentage of any financial benefit you gain following work we have undertaken on your behalf. Our legal costs are therefore taken as a percentage of any damages you receive or other financial benefit you gain.
Because of the risk involved, we will generally only undertake work on a damages-based agreement where we consider the case to have a reasonably strong prospect of success and there is a real possibility of you receiving a financial benefit.
To compensate the risk of not being paid fees in the event of losing and the success criteria not being achieved, save for appeal proceedings, the DBA fee payable for solicitors’ fees, counsel fees and VAT from monies recovered from the opponent will equate to a sum of up to 25% of general damages and pecuniary loss (other than future pecuniary loss) for a personal injury claim, and up to 50% of the sum recovered for all other matters (excluding employment claims). In respect of any appeal proceedings there is no limit on the DBA percentage fee payable.
The DBA percentage fee for solicitor fees, counsel fees and VAT is paid by way of deduction from the sum recovered (damages) from the losing party. In employment claims the DBA fee is up to 35% of the sum recovered for solicitors’ fees and VAT. All other disbursements (including expert fees) and expenses are payable by the client in any event, and in addition to the DBA percentage fee.
Where a client obtains an entitlement to costs from an opponent, it will not be entitled to recover a fee directly based on the DBA percentage fee, but may be entitled to recover solicitors’ fees based upon time spent and applicable hourly rates, plus all disbursements, reasonably and proportionately incurred and VAT if applicable. In any event, the receiving party cannot recover greater costs than incurred under the DBA.
Having regard to the rules relating to recovery of costs from an opponent, where a client enters into a DBA with a solicitor, there may potentially be an increase in irrecoverable costs from the opponent, in particular where disputes are settled at an early stage.
Please also refer to the ‘Legal costs if you lose’ section above, as it will be relevant for cases undertaken on a Damages-Based Agreement, as well as other disputed matters which are subject to Court proceedings.
Advantages and Disadvantages of CFA and DBA funding
Advantages:
• Entering into a CFA or DBA with a solicitor will enable a client to share the risk and costs of litigation
• If a CFA is entered into and the case is lost, or predetermined success criteria are not achieved, a client may only have to pay reduced solicitors fees (and possibly no solicitors’ fees), and disbursements and expenses
• If a DBA is entered into and predetermined success criteria are not achieved the client should have no liability for solicitors’ and counsel fees, but will have to pay disbursements and expenses
• If a DBA is entered into and the predetermined success criteria is achieved (i.e. the case is won), but the recovery from the losing party is relatively low, the DBA percentage fee from recovered monies may be a sum significantly less than that which would have been payable by the client on a normal retainer basis or pursuant to a CFA.
Disadvantages:
• If a CFA is entered into and predetermined success criteria are achieved (i.e. the case is won), in addition to normal costs the client will have to pay the CFA success fee
• If a DBA is entered into and the predetermined success criteria is achieved (i.e. the case is won), depending upon the sum recovered from the losing party, the DBA percentage fee from recovered monies may be a sum significantly greater than that which would have been payable by the client on a normal retainer basis or pursuant to a CFA.
Benefit of funding arrangements:
• CFAs and DBAs potentially enable a client to pursue good claims and facilitate access to justice
• Before entering into a CFA, DBA, or any funding arrangement it is necessary for a client to consider the financial implications of “sharing the risk”, what costs may be recoverable from an opponent (assuming any settlement or award includes an entitlement to costs), and as to the potential net proceeds from the litigation.
Charges on the Hourly Rate
Our hourly rates will be agreed with you upon instruction and confirmed in our engagement letter. You may set a cap to limit the amount of fees you incur where you are paying on an hourly basis. Depending on the type of case, it may be possible to agree staggered fees for each stage of the work carried out.
Legal Expenses Insurance
Unsuccessful parties to litigation or claims that a issued in Court will normally be required to pay a proportion of the winner’s costs as well as their own. ‘After-the-Event’ (ATE) insurance offers a safeguard against all or part of this risk.
As the name suggests, the insurance is taken out after the incident has occurred, or with the insurer being informed of the details of the litigation so the policy is specific to the case. It is differentiated from “Before-the-Event’ (BTE) insurance in reference to a policy for legal expenses that may pre-exist the claim or cause of action.
ATE can be purchased through this firm via a broker, and can be purchased before proceedings have been issued or at any time after they have been issued. However, the later the date of purchase, the more expensive the premium is likely to be. A delay in taking ATE may make the obtaining of cover more difficult.
You may already have a BTE insurance policy which covers legal expenses, so it’s important to check all insurance policies for legal expenses insurance. Each policy will vary and therefore the scope of the policy will need to be considered together with the amount of any excess (if any) that needs to be paid in order to make a claim on that policy. The existence of a pre-existing legal expenses insurance policy may affect the ability to recover an ATE insurance premium from an opponent in the event of success. Where ATE insurance is taken it will be necessary to keep the insurer informed about the progress of the claim and relevant material matters.
In order to obtain ATE insurance, a proposal form and your solicitor’s risk assessment of the case will be forwarded to the insurer for consideration. The risk assessment will address the merits and the likely costs of the claim, and will include any pleadings, counsel’s opinions or other relevant documents. The insurer will then assess the information provided and decide whether to offer the insurance and the amount of premium.
ATE is available to meet either the other side’s costs only, or the other side’s costs and an element of your own costs, subject to the level and terms of indemnity of the policy. ATE can include costs incurred before inception of a policy and the amount of cover available ranges from a few thousand pounds up to £10m or more. Subject to the circumstances of the matter and the type of ATE policy entered into, it may be possible to increase the level of cover in stages, with an additional premium being incurred on each increase in cover.
ATE is usually available only to claimants but some insurers can provide cover for defendants. These policies do not cover the insured’s own management time and expenses, but may cover an element of expenses incurred by solicitors, such as counsel fees, in investigating and pursuing the claim.
The ATE policy premium can be deferred until the outcome of the case, but this may not always be the case. As with other insurance products, in respect of commercial disputes ATE insurers may seek payment of an element of the premium when the policy is taken out.
Where an ATE policy is taken out on or after 1 April 2013, the ATE premium will not be recoverable from the losing party in the litigation, save for limited exceptions relating to insolvency proceedings up to 5 April 2016, publication and privacy proceedings (defamation), mesothelioma cases and for an initial expert’s report on liability and causation in clinical negligence claims.
Where a claim is successfully settled for a sum without or including costs, any ATE premium due will be payable to the insurer.
In the event that you (the insured) recovers damages but are required to pay all or an element of the opponent’s costs (e.g. for a substantial period following the date of an opponents Part 36 ‘without prejudice except as to costs’ offer), costs payable to an opponent may only be contributed to by the insurer for such sum in excess of damages recovered i.e. the insured’s damages may, subject to the terms of the ATE policy, have to be taken to pay the opponents costs prior to the insurer paying out under the policy.
The overall risks should be taken into account against the cost of the premium and/or excess, and the value of the claim. Where the case involves personal injury, the claimant should consider the cost implications if they are not able to benefit from the QOCS rules relative to the policy premium, the value of the claim and potential Court action. The suitability for obtaining ATE requires assessment on a case by case basis.
If you wish to discuss your case or any of the funding methods above, please contact us.
Information on the Small Claims limit
The Small Claims Track limit is for claims that are valued at (or the amount claimed is) no more than £10,000 overall. The small claims limit varies depending on the circumstances of the claim as detailed in the table below.
| £5,000 | Value of the personal injury aspect of an RTA claim must exceed £5,000.00. |
| £1,000 | RTA personal injury claims involving children, vulnerable road users or protected parties must exceed £1,000 in valuation |
| £1,500 | This is the small claims limit for personal injuries in general (i.e. those not arising from an RTA). The claim must exceed £1,500 in valuation |
| £10,000 | This is the top limit for Small Claims in general. If the claim exceeds a valuation of £10,000 overall when the personal injury aspect of the claim is added to the other element of the claims made (e.g. loss of earnings) it will be allocated into another track. |
Claims that fall within the scope of the Small Claims track (i.e. below the amounts shown in the table) are generally not able to recover legal costs from the losing party, even if the case is won. If the value of the claim exceeds £10,000, it is is likely to be allocated to one of the other tracks and in those cases, costs are generally recoverable from the losing party as long as you win.