Funding a dispute

In low value and straightforward cases, we may be able to cap our fees or offer fixed fees for a defined scope of work or stages of the litigation. In addition, you will also be responsible for paying your disbursements. If you are successful, you may be able to recover from your opponent some of the fees and disbursements that you have paid. If you are unsuccessful, then in addition to your own costs, you may have to pay some of the fees and disbursements incurred by your opponent.

This type of agreement is often referred to as a ‘no win, no fee’ agreement, which is somewhat misleading as it usually only covers your liability for your solicitor’s fees and not expenses or disbursements (such as Court fees, and barrister and expert fees) or your opponent’s fees and disbursements if you are unsuccessful.

A CFA is a private funding agreement where, in exchange for a solicitor agreeing that they will not seek recovery of some or all of their fees if a case is unsuccessful, you agree to pay the solicitor a “success fee” in addition to their normal fees if the case is successful. The success fee is calculated as a percentage of the normal fees and cannot be more than 100%. The success fee itself is not recoverable from your opponent.

It is important to note that if you are unsuccessful, then in addition to your own expenses and disbursements, plus any sums due to your solicitor under the CFA, you may have to pay some of the fees and disbursements incurred by your opponent.

CFAs can be terminated on certain grounds by you or your solicitor, and in these circumstances you may be charged fees.

This type of private funding agreement is similar to a conditional fee agreement, however, if you are successful, instead of your solicitor charging you on a time spent basis, the solicitor’s fees for the work conducted in pursuing the litigation is charged as a percentage of the damages recovered. The percentage is agreed at the time the parties enter into the agreement and can be no more than 50%.

In addition to any sums due under the DBA, you will also be responsible for paying your expenses or disbursements (barrister’s fees will, in certain circumstances, be included under the terms of the DBA). You may be able to claim your solicitor’s costs from your opponent if you are successful, but only the actual amount of these costs, not the percentage of the damages recovered that you are liable to pay your solicitor.

If you are unsuccessful, then in addition to your own expenses and disbursements, you may have to pay some of the fees and disbursements incurred by your opponent.

Subject to a full review and analysis of your case and the prospect of success, we may offer this form of funding.

It is worth checking any existing insurance policies that you may have. Commonly, legal expense insurance is often included as an additional benefit on insurance policies and premium banking packages. You may also have purchased a specific product to cover certain risks which may provide cover for legal fees for the litigation you are contemplating. This applies to individuals and businesses.

If you do have existing insurance, there are usually time limits for making a claim for your legal costs and so it is important to notify the insurer without delay. Whether your existing insurer will agree to provide cover for a particular dispute will depend upon the insurer’s review of the case. We cannot guarantee that the insurer will agree to provide cover for any particular dispute or that the extent of the cover available will be sufficient to cover all of the legal costs.

After the Event insurance (ATE) for your opponent’s legal costs and/or disbursements can be purchased to cover the risk of paying some of the expenses of litigation.  ATE policies will not normally provide insurance cover for your own solicitor’s fees.  Typically, insurers will require your case to have prospects of success of 60% or more in order to offer any insurance product.  It is therefore advantageous to seek legal advice in early course, in order that prospects of success can be assessed and if necessary, where a broker or insurer require a barrister’s opinion, a barrister can be instructed to advise. You will need to pay for our services in preparing the application and obtaining an opinion from a barrister. The costs of doing so will not be recoverable from your opponent.

Generally, the premium paid for an ATE insurance policy, and any costs in assessing the prospects of the matter, are not recoverable from your opponent if the litigation is successful.  Payment of the premium for an ATE insurance policy may be deferred until the conclusion of the litigation and/or the premium may be self-insuring which means that it is not payable if the litigation is unsuccessful.

Wright Hassall is not an insurance broker, but we may assist you in making an application to an insurance broker or an ATE insurer and advise you upon the suitability of the terms of any insurance policy which is offered. We cannot guarantee that an application will lead to insurance products being offered or that any products which are offered, will be sufficient to cover all of the legal costs, or that payment for the premium will be deferred and/or self-insuring. 

If you are a member of an organisation, trade union or similar association, you may have legal expenses insurance or other funding assistance as a benefit of your membership which may assist you to pay the costs of this matter and/or with your opponent’s costs if unsuccessful.

If you have this benefit, there are usually time limits for making a claim for cover or funding and so it is important to discuss this with us at the earliest opportunity. If you do not comply with the requirements of the organisation, you may lose the benefit of any cover or funding that is available to you.

If you are not sure, you should make enquiries with your membership organisation as to whether you have any such cover or assistance and if so, you should inform us immediately.

Whether any insurance or other funding assistance is available to you for a particular dispute will depend upon the organisation’s review of the case and/ or your eligibility. We cannot guarantee that the insurer will agree to provide cover for any particular dispute or that the extent of the cover available will be sufficient to cover all of the legal costs.

Third party funding is when a third party (who is not a party to the dispute) agrees to finance your disbursements and/or legal costs in return for a fee. The fee is usually a percentage of any monies you recover.

If you are successful, you pay the third-party funder from the funds you obtain. This is not a loan, if litigation is lost a third-party funder will lose their investment and no sums will be repayable.

Third party funders usually require After the Event insurance to be taken out in conjunction with their funding agreement. If you are unsuccessful, there will not be anything to pay to the third-party funder and the After the Event insurance will normally cover the opponent’s costs and your own disbursements.

In assessing any potential investment in litigation a third-party funder will have regard to the value of any claim, the prospects of the claim resulting in a successful outcome and the prospects of recovering any monies awarded as a result of the litigation. There are several third-party funders available on the market and we can assist you in making enquiries in this regard.

You can explore the possibility of obtaining a specialist litigation loan to fund your costs and disbursements as they are being incurred. This may be a suitable option if you are unable to afford to pay the costs and disbursements at present but will be in a position to pay off the litigation loan once your matter has resolved.

Loans are normally provided as a facility which allows you to draw-down what you need and when you need it, that is, when the costs and disbursements need to be paid. Interest is usually charged only on the amount you drawdown and not on the full loan. Hence, you only pay interest on the amount you use.

You can explore the possibility of borrowing monies to fund your own costs and disbursements as they are being incurred and your opponent’s costs should your claim be unsuccessful. This is a matter for you and is not something that we will advise you on.

If the prospects of a claim are strong enough, we will work with you to find a suitable funding arrangement to enable you to seek redress and manage the costs of litigation.

This is a form of financial support for people who cannot afford legal services. Legal aid is not available to businesses and is only available for certain types of dispute, subject to certain conditions. You will need to make enquiries whether legal aid is suitable for the particular dispute and whether you may qualify for it.