MEABY & CO – Lawyers Providing Business Owners and Managers In London and Essex With Sensible, Practical and Pragmatic Legal Advice.
Fees and Funding
Funding a litigation case can be expensive and it is one of the biggest deterrents for people when deciding whether or not to bring a case forward. Access to the court system has historically largely been restricted to those with the ability to pay what can be substantial legal costs. However, we know that litigation itself is stressful enough without having the additional concern of worrying about escalating legal fees and how to cover the costs, especially where you believe you have a strong case or where you have no option but to defend.
At Meaby & Co, we recognise that not one size fits all, and we offer a variety of funding options and arrangements, tailored to suit you and your particular circumstances. We understand that there are advantages to alternative funding arrangements to both the client and the firm which extend beyond the obvious cash flow benefit.
The general rule regarding litigation costs is that each party will bear his or her own costs. However the losing party is usually ordered to pay both parties costs following a court hearing, although this is not set in stone. It is important therefore to have a funding plan in place to cover incurred or unexpected costs. Our fees are billed at a standard hourly rate on a time spent basis, plus disbursements and VAT, but we can offer an alternative to this traditional method of funding, depending on your particular case.
Fixed fee arrangements can be put in place when dealing with matters where the instruction is not overtly complex, the transaction can largely be dealt with procedurally and there is limited face-to-face time with the client required. They are also sometimes appropriate for a fixed phase within a transaction. This provides certainty to the client as to the costs which they will be liable for.
No-win-no-fee/ Conditional Fee Agreements (“CFA”)
A CFA, also known as a no-win-no-fee, is an arrangement between the client and the solicitor whereby the solicitor does not charge a fee if the claim is unsuccessful, but charges normal fees plus a “success fee” if successful. The success fee would be equal to a percentage uplift on the hourly charge, up to a maximum of 100%. If the claim does not succeed, the client will only be responsible for the solicitor’s expenses, save that the client may be liable for the other side’s costs and expenses, under the general rule that the losing party usually pays the winning side’s costs.
This type of arrangement provides for lower or discounted hourly rate fees, instead of either full hourly rate fees or zero fees (no-win-no-fee arrangement). To account for the discount applied, an uplifted success fee is charged to the client if the claim is successful. This limits the risk to the solicitor of taking on a matter at a discounted rate.
Damages Based Agreement (“DBA”)
This type of arrangement is relatively new to the UK. It is one whereby the solicitor’s legal fees are only payable in the event that the matter is successful (as defined within the Damages Based Agreement). The solicitor agrees to accept a percentage of the damages received in place of the usual hourly rate fees. The figure will usually include expenses and disbursements, and the percentage figure agreed usually reflects the level of risk undertaken by the solicitor. The risk is therefore shared by the solicitor and the client.
Third Party Funding
This is an alternative method of litigation funding whereby a professional or commercial funder with no connection to the matter will fund the costs associated with the litigation in return for a share of the money awarded in damages if the client wins the case. The funder can also bear the risk of covering your opponent’s costs of the litigation by offering an indemnity or paying for an insurance policy which will cover your opponent’s legal costs in the event that the client is ordered to pay their costs. This type of funding can cover arbitration costs as well as court proceedings. The funder is only paid on the successful conclusion of the claim and therefore the litigation funder will look carefully at the merits of the claim before agreeing to fund a case. There are a wide range of litigation funders with whom we work very closely to ensure that you get the best option available.
Legal Expenses Insurance
Legal expenses insurance can be purchased to fund the costs of legal advice or the costs of bringing or defending a claim. There are 2 types of legal expenses insurance.
Before the Event (“BTE”) is a policy which provides cover for possible future legal issues. The cover protects the customer against an unforeseen legal event.
After the Event (“ATE”) is usually purchased at the point where there is a need for a solicitor to become involved. The policy is normally taken out after the cause of the dispute has arisen, to protect against the risk of having to pay your opponent’s costs and expenses if you lose the case. A premium will be payable, usually based on the insurer’s estimate of the legal costs required to bring the matter to a conclusion. It is worth noting that the insurance premium is not recoverable, even in circumstances where you are successful.
All of the above funding arragements are subject to assessment by the solicitor and being satisfied that the risk of proceeding on a funding arrangement does not outweigh the risks associated with succeeding in the claim/defence. We take each matter on a case-by-case basis and will advise which arrangement is most appropriate to the individual and their circumstances.