Litigation can be a costly process but there are ways in which you can fund it. The costs of litigation will include not just your legal costs which are your solicitors’ fees but also disbursements such as barristers’ fees, court fees and potentially expert and mediator fees. Furthermore, if you are unsuccessful in your claim (or in defending a claim), you will likely be ordered to pay a significant proportion of your opponent’s costs.
The ways in which you can fund your claim are:-
1. Pay an hourly rate
In most cases your solicitor will charge on a time spent basis. You will be informed of your fee earner’s hourly rate at the start of the instruction, alongside the hourly rate of anyone else who may work on your matter.
If you are successful in your claim, you may be able to recover some of your costs from your opponent. Whether you are able to recover costs from your opponent will not affect the contractual obligation for you to pay your legal costs in full.
2. Conditional fee agreement (no win no fee)
A conditional fee agreement (CFA) between you and your solicitor usually means that you will not pay anything if you lose your case. If you win your case, you will pay your legal fees in full plus an additional amount which is known as a success fee. You can still attempt to recover some of your costs from your opponent if you win, but you will not be able to recover the success fee.
The general rule is that the losing party pays the winners costs, therefore, if you lose your case you will not be liable for your own legal costs but may be ordered to pay your opponent’s legal costs.
Typically when agreeing a CFA, after the event insurance is considered. This is an insurance policy that covers your opponent’s costs if you lose.
3. Damages based agreement
If you are successful in your claim, you will be awarded “damages”. This is payment of your losses. A damages based agreement (DBA) between you and your solicitor means that if you are successful your solicitor will take an agreed percentage from your damages as payment of costs. If you are not successful in your claim, no payment will be due to your solicitor.
This agreement is different to a CFA as your solicitor will only take a percentage of your damages and any disbursements incurred, such as the court fees but you are able to recover disbursements from your opponent if successful.
CFAs and DBAs are provided on a limited basis as we have to consider these on a commercial basis.
4. Legal aid
Only firms with a legal aid franchise are able to offer legal aid funding for civil litigation. We cannot provide legal aid.
Information regarding legal aid can be found on the government website - www.gov.uk/legal-aid
5. Pro bono
This is free representation for part or all of your claim. This type of funding is rare and is generally considered where there is an issue of public importance or a personal interest in it.
Many organisations provide free advice such as Citizens Advice Bureau.
6. Insurance policies
a. Legal expenses cover
This cover if known as “before the event” insurance and may be found on your life/car/home insurance or it is sometimes an add-on with certain bank and building society accounts.
The provider may have a nominated list of solicitors for you to choose from and they will cover the legal costs involved from instruction.
If you have a preferred solicitor that you would like to instruct, the insurance provider may cover that solicitor but the hourly rate would need to be agreed with the insurer as they typically pay less than the recommended hourly rates.
Before bringing any claim it is always worth checking whether you have any cover in place as it can be valuable.
b. After the event insurance and disbursement funding
As mentioned above, this type of insurance is usually arranged alongside entering in to a CFA but can be arranged without a CFA.
The insurance premium is only payable if you win and because of this they are generally quite high and the premium payable varies at different stages of the claim being settled.
This cover only relates to your opponents costs. You will still need to fund your own legal costs.
Some providers also have disbursement funding to help with payment of things like court fees or expert fees. Interest is added to these payments at around 10%, depending on the provider.
7. Third party funding
A commercial funder may agree to pay for your legal fees and disbursements in return for a fee that would be payable out of your damages, if you win. If you lose, you do not pay anything to the funder. In certain circumstances (primarily claims in insolvency matters) a funder may be able to ‘buy’ a claim from you for a fee and, with no further involvement from you (save as for assisting in the claim with disclosure, witness evidence etc.), will pursue the claim as if they were the claimant.
If you would like to discuss a claim you are looking to pursue and the possible funding options available to you, get in touch with the dispute resolution team who will be able to advise you.
The information on this site about legal matters is provided as a general guide only. Although we try to ensure that all of the information on this site is accurate and up to date, this cannot be guaranteed. The information on this site should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.
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