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Legal Services - 2 - Funding of legal services - Coggle Diagram
Legal Services - 2 - Funding of legal services
Private funding - litigation funding option 1
For wealthy individuals
Less frequent than for non-litigation matters but possible
Conditional Fee Arrangement - litigation funding option 2
(No win no fee)
If client loses:
Client will
not
pay solicitor
any fees
But
may still have to pay
Defendant's solicitor's fees (called 'costs'), defendant's expenses, and defendant's disbursements
Own solicitor's disbursements
If client wins:
Solicitor entitled to their
costs and disbursements
(LRFLP)
Likely
recovered from losing party
And a
SUCCESS FEE
CLIENT PAYS THIS!!!
!!!
Limited to 100%
of their fees (ie Solicitor cannot get more than double their fees)
Limitations
Success fee cannot be more than 100% of normal fees charged
CFAs
cannot be used in family proceedings
Damages-Based Agreement
- litigation funding option 3
If client wins
Solicitor entitled to
specified %
of
client's damages
Personal injury - limited to 25%
Otherwise limited to 50%
Employment tribunal - 35%
Solicitor entitled to their
costs and disbursements
(LRFLP)
Likely recovered from losing party
This amount is
deducted from what the client owes the solicitor
under the DBA
If client loses
Client will not pay solicitor
any fees
OR
any disbursements
(differs from CFA, where losing client doesn't pay fees but
does
pay disbursements)
Still liable for other side's costs
Basically,
Solicitor DOES NOT GET PAID AT ALL
DBA MUST INCLUDE
Definition of success
What happens if costs payable to opponent are awarded
Explain how parties can
terminate the agreement
Third-party funding/litigation funding
- litigation funding option 4
Third party covers EVERYTHING
apart from other side's costs!! (if awarded)
Funder generally
paid from awards made to the party
Funder generally
hopes to make a profit
- eg 15-45% more than actual costs
No cap on what % of damages Litigation Funder can take
If party is
unsuccessful, party bears costs it agreed to fund
(so everything APART FROM other side's costs)
Similar to DBA but third party, not solicitor, takes on risk + no % caps
Legal Expenses Insurance (BTE and ATE)
Before the Event Insurance (BTE)
Solicitor should check before taking on client
Inform client if BTE doesn't cover them and NOT REPRESENT THEM
Often in car insurance and home insurance, taken out
BEFORE CLAIM-CREATING EVENT OCCURS
Insurer
pays solicitor's legal costs
Always fees
Often disbursements
Sometimes costs awarded to other side
After the Event Insurance (ATE)
Taken out after CLAIM-creating event occurs
Covers:
Disbursements
And
often
COSTS AWARDED TO OTHER SIDE
Commonly used with CFA and DBA (as both require client to pay other side's costs, and CFA requires paying disbursements)
Union Legal Expense Cover
Solicitor should check and inform client if they're not covered
LEGAL AID - CIVIL AND CRIMINAL
Civil legal aid
Availability:
Housing
disputes
Family
issues
Debt
issues
DOESN'T COVER:
Tort (apart from claims covering significant birth defects)
Contracts
Client must pass both Financial Need Test AND Merits Test
Merits test
Good prospect
of success
Financial need test
Income
Savings
Family circumstances
Living costs
Solicitor should know:
Client m
ay still have to make partial contribution
to costs
Can only take CLE case
if firm contracted with Legal Aid Agency
Solicitor
must consider if low-income client eligible for legal aid
Legal aid
may be withdrawn
if:
Change in merits of case
Other side's solicitor raises concerns about
conduct
Legally aided party cannot be forced to pay other side's costs
Criminal legal aid
Means test/Financial need test
Universal credit/job-seekers allowance automatically entitles
Considers:
Household income
Savings/capital
Living expenses/outgoings considered
Merits test
Client must show it's
in the interest of justice
Eg proceedings deal with
substantial question of law
, or
client would likely lose livelihood or liberty
, or
client cannot present their own case
Cannot present own case - eg technical, doesn't know language, health/emotional/mental health issues
Crown Court cases automatically meet Merits test