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 bringing a legal claim often means that funding the costs of litigation is almost as important as the relief remedy sought.

Traditional retainer

The traditional method is for you to pay the solicitors’ costs of conducting a case at an agreed hourly rate. The Solicitors’ Practice Rules require solicitors to provide you with a client care letter 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 your 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, you and the law firm may enter into conditional fee agreement, sometimes referred to as a ‘no win, no fee’ agreement. The basic idea is that you will not have to pay anything to the firm acting for you if the case is lost, but if it is successful the lawyer will be entitled to charge you at the lawyer’s usual rate plus a success fee. The solicitor can charge a success fee of up to 100% of his fees.

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 you or upon the proper administration of justice.

Depending on the type of case, some legal costs and expenses can be recovered from the losing party at the end of the claim, but since changes were made to the CFA regime in April 2013, the ‘success fee’ element of legal costs can no longer be recovered, so if you win the case, this must be paid out of your damages.

Legal expenses insurance

You may have the benefit of legal expenses insurance, which often comes as part of your motor or home insurance policies. This is often called before the event insurance. In these cases, the costs incurred on your behalf will be met by the legal expenses insurer.

After the event insurance

This type of insurance can only be obtained once the legal dispute is underway. It provides you with insurance if you lose the case and face an order requiring you to pay the costs of the other side. It may also cover the costs of your own disbursements. However, since the insurance will not cover an award of damages or payment of a court order, it should really only be considered an option of last resort.

Legal aid

If you have a problem involving, for example, debt, family, housing or human rights, you might be able to get legal aid to help meet the costs of legal advice, family mediation and representation in a court or tribunal.

You’ll only be eligible for legal aid if you’re problem is serious and you can’t afford to pay for legal costs yourself (although your financial situation isn’t taken into account for cases about mental health tribunals; children in care; or child abduction).

Legal aid may not cover all the costs of your case; you might have to pay some of the costs upfront and/ or pay back some of the cost if you win money or property from your case.

Your legal adviser or mediator will apply for legal aid on your behalf. If you qualify, the government will pay their costs directly.

Article written by...
Nicola Laver LLB
Nicola Laver LLB

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A non-practising solicitor, Nicola is also a fully qualified journalist. For the past 20 years, she has worked as a legal journalist, editor and author.