Financing Civil litigation

Paying for a Case

How a case will be paid for is always a major issue in any litigation. The expensive nature of litigation often means that funding the costs of litigation is almost as important as the relief remedy sought.

Traditional retainer

The traditional method is for the client to pay the solicitor’s costs of conducting a case at an agreed hourly rate. The Solicitors’ Practice Rules require solicitors to provide their clients with client care letters which should include at least basic information about charging rates and when bills are likely to be sent, and if possible, an estimate of the future costs. The Solicitors’ Code of Conduct also requires solicitors to consider which of the various options on funding is best suited to the client’s circumstances. A breach of the costs provisions of the Solicitors’ Code of Conduct does not render the retainer illegal but can be taken into account in assessing the amount of costs payable.

Conditional fee agreements

As an alternative to a traditional retainer, the client and the solicitor’s firm may agree to enter into a conditional fee agreement. Since 1998 it has been possible to enter into these agreements in all types of civil litigation other than family work. The basic idea of these agreements is that the client will not have to pay anything to the firm acting for him or her if the case is lost, but if it is successful the lawyer will be entitled to charge the client at the lawyer’s usual rate plus a success fee. The success fee will be a percentage, up to 100%, of the costs otherwise chargeable to the client.

To be effective a conditional fee agreement (CFA) has to be in writing and have a success fee (if any) limited to 100%. A CFA will be enforceable even if there is a breach of these conditions, provided there is no materially adverse effect on the client or upon the proper administration of justice.

Legal expenses insurance

Some clients have the benefit of legal expenses insurance, often as part of their motor or home insurance policies. This is often called Before The Event insurance. In these cases the costs incurred on behalf of the client will be met by the legal expenses insurer.

After the event insurance

A client needs to be told about potential liability for the other side’s costs if the case is unsuccessful. The usual rule is that the unsuccessful party in the proceedings is ordered to pay the successful party’s costs. The other side’s costs generally have to be paid out of the losing party’s personal resources. 

Legal aid

Under the Legal Aid Act 1988 a person could qualify for legal advice, assistance or representation, the cost of which was effectively payable out of public funds through the Legal Aid board. Legal aid was replaced by the Community Legal Service from 1 April 2000.

Community Legal Service

Assistance under the Community Legal Service has been designed to ensure that public funds are used to support claims that most need assistance in this way. The idea is that the amount of public funding given to a case should be commensurate with its needs, so that limited funding will be given if that is all that is needed, but that full public funding will be given to the most deserving cases. Public funding under the Community Legal Service is not available in damages claims for personal injuries or death (except that clinical disputes are within the scheme). The assisted party must be an individual, so help under the Community Legal Service is not available to limited liability companies.