The obligation to advise on funding
The obligation on solicitors to advise in respect of the different ways of funding litigation applies to commercial entities as well as individuals. The case below illustrates the approach that can be taken by the Court when considering whether or not to disallow a solicitor’s costs for failing to advise correctly in respect of funding.
AMH v The Scout Association,  SCCO, Case No: HQ13X05225
The Claimant brought a case against the Defendant claiming damages for childhood sexual abuse. From March 2012, the Claimant’s case was funded by way of legal aid. In March 2013, the Claimant discontinued with the legal aid funding and continued with the claim pursuant to a Conditional Fee Agreement dated 26 March 2013 which was supported by an After the Event (“ATE”) insurance policy.
In February 2013, the Claimant’s solicitor had briefly considered whether it was in the Claimant’s best interests to continue with the legal aid; whether the Legal Services Commission would provide sufficient funding to proceed to trial and whether he would remain eligible for legal aid if he obtained employed or whether the Claimant should sign up to a CFA prior to the new costs regime taking effect on 1 April 2013. The Claimant’s solicitor also had a brief conversation with the Claimant and according to the Claimant’s solicitor’s attendance note, the Claimant agreed to change his funding.
It was the Defendant’s case that the advice provided to the Claimant was inadequate and incomplete as the Claimant’s solicitor failed to set out the various pros and cons of the funding options including matters such as capped success fees and qualified one-way costs shifting that applies to personal injury claims. The Defendant stated that the funding choice made by the Claimant was “…demonstrably unreasonable.”
Master Leonard had to consider whether, having regard to all the circumstances of the case, it was reasonable for the Claimant to discontinue with the legal aid funding and enter into a CFA and ATE insurance policy.
Master Leonard agreed with the Defendant that the Claimant’s solicitor should have set out in written correspondence the pros and cons of the funding arrangement and that the advice provided was not as detailed and complete as it should have been. However, one of the crucial aspects in this case was that the CFA that was being entered into with the Claimant was a CFA Lite which means the Claimant would not have lost any of his damages in order to meet any unpaid costs of his own or the Defendant’s.
It was Master Leonard’s decision that the decision to discharge the public funding and sign up to the CFA and ATE insurance was reasonable in this particular case taking into account the various circumstances of this matter. Master Leonard said it did not follow that a funding choice would be unreasonable if it was not made on the best available information.
A warning shot
Whilst the costs were allowed in this case, it is a warning shot that the obligation for solicitors to address litigation funding options with their clients, at the outset and during the course of a case, is becoming ever more compelling and a failure to do so could result in a failure to recover costs.