#16831 - Funding - Civil Litigation

FUNDING

Conduct O(1.13) – You must provide your client with the best possible information about the likely overall cost of the matter. O(1.6) – Fee agreements must be suitable for the client’s needs and take account of their best interests. IB(1.13)-(1.21) – Fee arrangements with your client
Insurance
Before the Event Insurance [BEI]	After the Event Insurance [AEI]
Client may already have funding in place as a benefit of an existing legal expenses insurance policy. Often included with household or motor insurance – specifically ask client if there is any insurance in place which might fund litigation. If so, you should check the extent of the cover available and any conditions or exclusions.	Where there is no existing policy, insurance can be purchased specifically to cover the costs of the proposed litigation. Generally, if a claimant fails in his claim he will be ordered to pay his opponent’s costs. AEI can cover this liability and is often (but not always) used with a CFA or DBA to do so and to cover disbursements for which the client remains responsible.
Conditional Fee Agreement [CFA] S.58(2)(a) Courts and Legal Services Act 1990: an agreement for advocacy or litigation services which provides for the lawyer’s fees and expenses to be payable only in specified circumstances. The most common arrangement is for the CFA to provide for a success fee (a percentage increase in the fee if the case is won) – the solicitor takes a risk when he agrees to run a case under a CFA and also agrees to delay collecting his fee; he also has no guarantee that he will ever be paid.
If your client wins Fee plus uplift (success fee) Success fee subject to statutory cap: Must not exceed 100% of solicitor’s costs. For personal injury claims, must also not exceed 25% of the damages agreed or awarded (excluding those for future financial losses). Client pays success fee (and shortfall between costs between the parties and base costs, if any).	If your client loses No fee Losing opponent pays costs between the parties.
Damages Based Agreement [DBA] S.58(AA) Courts and Legal Services Act 1990: an agreement for advocacy, litigation or claims management services which provides for payment for the service to be determined by reference to the amount of financial benefit obtained.
If your client wins Fee determined by financial benefit obtained Subject to statutory cap For claims not involving personal injury, the payment must not exceed 50% of the sums recovered. For personal injury claims, the payment must not exceed 25% of the damages recovered (excluding those for future financial losses). Client pays shortfall between costs between the parties and base costs, if any.	If your client loses No fee Losing opponent pays costs between the parties.
Costs Not Covered by CFAs or DBAs Disbursements Liability for opponent’s costs (also see QOCS below) BUT client can buy AEI for liabilities not covered by CFA or DBA
Trade Union Funding If the client is a member of a trade union or professional organisation, he may be entitled to funding for certain types of claim as a benefit of membership. For example, if the client has suffered an accident at work and is a union member, his union may fund any legal action against his employer. You must ask the client whether his legal fees may be paid by someone else such as a trade union.
Qualified One-Way Costs Shifting [QOCS] In personal injury claims, the general rule is that an order for costs against the claimant can be enforced without court permission only to the extent that the value of the order does not exceed the amount he has recovered in damages and interest – CPR 44.14. The effect of this is that a losing claimant in a personal injury claim will not have to pay the successful defendant’s costs – important exception...

Conduct

O(1.13) – You must provide your client with the best possible information about the likely overall cost of the matter.
O(1.6) – Fee agreements must be suitable for the client’s needs and take account of their best interests.
IB(1.13)-(1.21) – Fee arrangements with your client

Insurance

Before the Event Insurance [BEI]

After the Event Insurance [AEI]

Client may already have funding in place as a benefit of an existing legal expenses insurance policy.
Often included with household or motor insurance – specifically ask client if there is any insurance in place which might fund litigation.
If so, you should check the extent of the cover available and any conditions or exclusions.

Where there is no existing policy, insurance can be purchased specifically to cover the costs of the proposed litigation.
Generally, if a claimant fails in his claim he will be ordered to pay his opponent’s costs. AEI can cover this liability and is often (but not always) used with a CFA or DBA to do so and to cover disbursements for which the client remains responsible.

Conditional Fee Agreement [CFA]

S.58(2)(a) Courts and Legal Services Act 1990: an agreement for advocacy or litigation services which provides for the lawyer’s fees and expenses to be payable only in specified circumstances.
The most common arrangement is for the CFA to provide for a success fee (a percentage increase in the fee if the case is won) – the solicitor takes a risk when he agrees to run a case under a CFA and also agrees to delay collecting his fee; he also has no guarantee that he will ever be paid.

If your client wins

Fee plus uplift (success fee)

Success fee subject to statutory cap:
- Must not exceed 100% of solicitor’s costs.
- For personal injury claims, must also not exceed 25% of the damages agreed or awarded (excluding those for future financial losses).
Client pays success fee (and shortfall between costs between the parties and base costs, if any).

If your client loses

No fee

Losing opponent pays costs between the parties.

Damages Based Agreement [DBA]

S.58(AA) Courts and Legal Services Act 1990: an agreement for advocacy, litigation or claims management services which provides for payment for the service to be determined by reference to the amount of financial benefit obtained.

If your client wins

Fee determined by financial benefit obtained

Subject to statutory cap
- For claims not involving personal injury, the payment must not exceed 50% of the sums recovered.
- For personal injury claims, the payment must not exceed 25% of the damages recovered (excluding those for future financial losses).
Client pays shortfall between costs between the parties and base costs, if any.

If your client loses

No fee

Losing opponent pays costs between the parties.

Costs Not Covered by CFAs or DBAs

Disbursements
Liability for opponent’s costs (also see QOCS below)
BUT client can buy AEI for liabilities not covered by CFA or DBA

Trade Union Funding

If the client is a member of a trade union or professional organisation, he may be entitled to funding for certain types of claim as a benefit of membership.
For example, if the client has suffered an accident at work and is a union member, his union may fund any legal action against his employer.
You must ask the client whether his legal fees may be paid by someone else such as a trade union.

Qualified One-Way Costs Shifting [QOCS]

In personal injury claims, the general rule is that an order for costs against the claimant can be enforced without court permission only to the extent that the value of the order does not exceed the amount he has recovered in damages and interest – CPR 44.14.
The effect of this is that a losing claimant in a personal injury claim will not have to pay the successful defendant’s costs – important exception...

#16831 - Funding - Civil Litigation

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