Civil law applies to non-criminal offences and resolves disputes between individuals and organisations. Examples of civil law cases include debt problems, landlord and tenant disputes, insolvency, most personal injury claims, breach of contract and employment issues. These conflicts usually aim to provide financial compensation for losses, products or services.
The most standard form of funding for such claims is the traditional agreement to pay on an hourly basis, regardless of outcome. This method of funding litigation is straightforward and flexible. Furthermore, at Witan Solicitors, we pride ourselves on providing good value for money to all our clients and offer competitive and sensible hourly rates.
However, we understand that pursuing a civil case is becoming increasingly expensive. Such claims can also be time-consuming and unpredictable, even with the best of planning. Our team at Witan Solicitors can help you remove this stress by suggesting a range of alternative funding solutions available in the marketplace. In this article, we summarise the different options you might want to explore when it comes to funding your civil law claim.
No Win, No Fee Options
Under a ‘No Win No Fee’ arrangement, you can make a compensation claim without having to pay upfront fees. If you lose the case, you don’t have to pay any legal fees at all. We only take a fee if your case is successful. This type of litigation funding is usually suitable for claims of over £50,000 and only in certain legal disputes.
In certain circumstances, it may be possible for us to take on your case on a ‘No Win Low Fee’ basis if you are not eligible for ‘No Win, No Fee’ funding. Under this arrangement, you would only pay part of our fee (based on hourly rates) and we get the rest of our legal fees paid only if your case is successful.
Conditional Fee Arrangements
The most frequently used No Win No Fee arrangement is a Conditional Fee Agreement (CFA) that you sign with your solicitors. This was introduced in the 1990s and is most often used by claimants, even though defendants also have the right to use them.
If you lose, you won’t have to pay any legal fees. Your solicitors will only charge a fee if your case is successful. In those circumstances, they will receive their fees (on an hourly basis) plus an additional ‘success fee’. This may be a percentage of the compensation you received and this is usually capped at a certain amount.
You will be liable to pay the success fee. Before April 2013, it was possible to recover the whole or part of this fee from the losing party in litigation as well as the solicitor’s usual costs, but this is no longer the case. This type of agreement is most commonly entered into in personal injury or clinical negligence cases but can be used in other areas of litigation too.
You can read about the most common types of CFA here.
Damages-Based Agreements
A Damaged-Based Agreement (DBA) is another type of No Win No Fee arrangement. It is sometimes referred to as a ‘contingency fee’ agreement and is a regulated agreement between a law firm and a client, in which the law firm agrees to share the risk of litigation in return for a part of any damages recovered if the case is successful.
It is similar to a CFA in that your solicitor’s earnings are dependent on the outcome of your case. However, the usual legal fees charged by the solicitors don’t apply in a DBA. Instead, they are paid a set percentage of the total recovery made. The maximum amount that the solicitors can charge is capped at 50% of the total of both the costs and damages recovered. This cap may be lower, depending on the type of claim you are dealing with.
Protecting Yourself
Another way to fund legal proceedings and to protect yourself from costs in the event of an adverse judgment is to purchase third-party insurance against legal costs, including litigation costs. This type of policy is often combined with a CFA or DBA (which reduces your exposure to your own lawyer’s costs), therefore allowing you an overall funding solution.
There is no requirement to have legal expenses insurance to pursue a claim. However, without an appropriate policy, you may be exposed to unnecessary financial risk if your claim is unsuccessful. The two most common options are After the Event insurance (ATE) and Before the Event insurance (BTE).
After the Event Insurance
After the Event Insurance (ATE) is an insurance policy purchased after a legal dispute arises, which is often used alongside alternative fee arrangements. Your solicitor can often arrange this and is different from BTE insurance policies, which are commonly purchased with, for example, home insurance.
Since it does not cover your solicitor’s fees, it is not a complete litigation funding solution. However, it will normally cover your opponent’s fees if your litigation is unsuccessful or is abandoned/settled after the winning party has incurred costs that you are liable to pay. It may also cover expenses such as medical reports, barrister fees and court fees.
The premium can be paid in various ways, from up-front to having a full contingent policy where you can only pay if you win (but you will have to pay a higher premium). It is important to be aware, however, that you will not be able to recover the premium you pay for ATE insurance from the other party, even if you do win the claim.
Although ATE policies can be arranged at any stage of the case, they may be more difficult and costly to secure later in the process.
Before the Event Insurance
A Before the Event (BTE) policy is purchased before the incident that gave rise to your claim and may be attached to a variety of other insurance products that you have purchased such as business, car or home insurance as an optional extra. It supports you should you require legal assistance in the future and would usually cover common types of disputes, such as personal injury, consumer contracts for goods or services and property disputes.
Under such a cover, you would typically be able to claim your legal costs, including solicitors fees, costs of expert witnesses, court fees and legal costs for the opponent if they win the claim. However, it will not cover compensation that you may be ordered to pay if you lose the case.
Most insurers will prefer to use a solicitor from their panel of vetted lawyers as they would have already agreed on payment rates with them. However, if you feel that your own solicitor would better serve your interests, you are not obliged to stay with your insurer’s panel solicitors. You can read more about this here.
Third-Party Funding
Third-party funding – where your claim is funded in full or in part by a third party not involved in the litigation but who has decided to invest in your case – is becoming increasingly popular. Under this arrangement, a commercial funder pays your litigation costs for a pre-determined share of your total recovery. The conditions of the agreement can vary but in most cases, you don’t owe the funder anything if your case is unsuccessful. Where a costs order is made against you, it will usually be up to the funder to pay your opponent's costs.
We, at Witan Solicitors, have relationships with several reputable third-party litigation funders across the UK and can guide you on the best funding options available to you depending on your circumstances.
Funding from Trade Unions and Other Bodies
It may be possible to get funding support from trade unions or professional associations.
Depending on the nature of the dispute, trade unions frequently provide legal advice and support to their members, often for no charge. However, trade union funding will be limited to certain types of disputes, such as employment disputes, and there may be costs attached to the provision of funding.
Trade unions will often engage multiple law firms as their panel of solicitors, who will assess the likelihood of your case’s success and if they consider it reasonable, before deciding whether to take on your case.
If you are a member of a trade union, it is therefore worth checking with them whether you are covered for legal advice.
Public Funding
Public funding or legal aid, as it is more commonly known, is limited to only a small number of civil cases. This is due to the Legal Aid Sentencing and Punishment of Offenders Act 2012 taking out many areas of civil law from the scope of legal aid. As a result, civil legal aid is only available for certain legal problems. Some examples of eligible disputes include;
- debt, if your house is at risk,
- housing, where you are homeless or at risk of being evicted
- or where a child is taken into care.
Eligibility will also depend on factors such as your personal and financial circumstances. Furthermore, not all law firms will offer legal aid as they must hold a contract with the Legal Aid Board to do so.
Pure Funding
A ‘pure’ funder is someone who has no personal interest in your case and funds it on the basis that if the claim succeeds, they will only recover the contribution that they have made. They have no control over the management of the litigation and will not profit from it. They will often be well-wishers or supporters of the claimant, such as friends or family, who just want to help out to ensure that they get access to justice.
How We Can Help
Every case and every client’s position is different. At Witan Solicitors, we are on hand to help you find the right litigation funding option for your circumstances so you can make a fully informed decision on how to proceed.
We understand that things are tight for everyone at the moment and therefore aim to provide as many alternative legal funding options as we possibly can. To have a chat about whether your case is eligible or appropriate for an alternative legal funding arrangement, contact us today via email.
