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Litigation Funding Options
There are various ways in which the costs of litigation can be managed, budgeted or funded. This summary provides an outline of the various funding arrangements that are available. We would be very happy to discuss these options with you in more detail.
Funding the Case yourself – Hourly Rate
This is the traditional method of funding and still the preferred method for many clients.
It is based on an hourly rate retainer with the fee dependent upon the amount of time spent by us on the particular matter. We endeavour to provide you with an estimate of costs at the beginning of the case and we will review that estimate at regular intervals with you to ensure that you are kept informed about the costs being incurred.
In straightforward cases where the amount of work we have to do is easier to predict, we may be willing to agree a fixed fee for the whole or certain parts of the claim. We already offer fixed fee packages for a number of areas including Small Claim matters (claims up to the value of £10,000), debt collection and possession proceedings for residential properties.
Conditional Fee Agreements (CFA) (also known as “no win no fee”)
A CFA is an agreement whereby a solicitor and a client can agree to share the risk of the litigation by coming to a financial arrangement whereby part or sometimes all of the solicitors’ fees will only be payable by the client in the event of success.
If any of the defined success criteria agreed when the CFA is entered into is achieved (i.e. the case is won) a success fee will be payable by the client in addition to the normal fees.
A success fee is an additional amount payable for the legal services; over and above the amount that would normally be payable if there was no CFA in recognition of the risk that we have taken on your behalf. It is a percentage uplift on the amount that would be payable if there was no CFA and that percentage cannot exceed 100%.
If a dispute is not settled and it goes to court to be determined at a trial or other hearing, in addition to ruling on the outcome of the dispute, the court can decide in its discretion how the costs of it are to be paid (that is, by whom, to whom, in what amount and whether they are to be assessed in detailed assessment proceedings). Usually the Court would order the losing party to pay a percentage of the successful parties’ fees.
If none of the defined success criteria is achieved (i.e. the case is lost or an agreed level of damages is not awarded) a client will only pay reduced solicitor fees, or no solicitor fees, subject to the terms of the CFA.
With most CFAs for commercial disputes, all disbursements (including counsel fees and expert fees) and expenses are payable by the client in any event.
If your case is not successful then you will still have to pay your opponent’s costs and expenses and your own disbursements but you may be able to obtain “After the Event” insurance to protect against this risk.
In April 2013 Qualified one way costs shifting (QOCS) was introduced and applies to all personal injury cases post April 2013. This is where a successful defendant cannot recover their costs from the losing claimant, expect in a selection of very precise circumstances.
Although CFAs are predominantly used in Personal Injury cases, we will consider entering into a CFA for other cases in exceptional circumstances. Each case will be assessed on its own merits when considering a CFA.
Damage Based Agreements (DBA)
A DBA is a type of contingency fee agreement between a representative and a client. The client will make a payment to the representative if the client obtains "a specified financial benefit" (usually damages paid by the losing side in the case). The amount of the payment will be determined as a percentage of the compensation received.
If the case is unsuccessful, the representative is generally not entitled to be paid.
Since 1 April 2013, DBAs can be used in almost all contentious business (except criminal and family proceedings). Before that date, they were only allowed in employment tribunals and some other tribunals.
This method of funding is not routinely offered by Marsden Rawsthorn.
Legal Expense Insurance (LEI) (also known as “before the event insurance” BTE)
Many clients already have an insurance policy which provides cover for some or all of their legal fees. You should check all relevant insurance policies to see whether any such cover exists. This can be included in home insurance policies, and certain other types of policy such as in credit card contracts. If you are not sure whether or not you have legal expenses insurance, we will be happy to have a look at your policy for you and discuss it with your insurer.
After the Event (ATE) Insurance
ATE insurance is a form of legal expenses insurance policy taken out after a legal dispute has arisen. ATE insurance usually covers a party's potential liability in the event of losing their case, in respect of their own disbursements (payments made to third parties on your behalf such as Court and expert fees) and their opponent's costs and disbursements. It is therefore often taken out with another form of funding to cover the client's own legal costs, such as a CFA or third party funding.
Third Party Funding
If you have a case with good prospects of success, we can explore the possibility of funding the litigation using a third party. Third party funding is only available for high value cases and usually involves a commercial funder agreeing to pay some or all of your legal fees and expenses in return for a fee which is payable out of the proceeds recovered from the resolution of the claim (whether by judgment or settlement). The fee is usually a multiple of the funds advanced or a percentage of the damages awarded. If the claim is unsuccessful, the funder will make no recovery and has no recourse against the claimant.
Funding by a Trade Union, Association or NFU
If you are a member of a trade union, association or NFU, your membership may include cover of legal fees. We can check the terms of your membership policy in order to advise as to its suitability.
In recent years the availability of legal aid has been dramatically reduced. Only those firms with a legal aid franchise can now undertake civil litigation on a legal aid basis. Although we have a legal aid franchise there are only certain very limited circumstances in which you may be able to obtain public funding to assist you in bringing or defending proceedings. We will discuss this option with you if it is appropriate.
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