5): Funding Options for Legal Services Flashcards
(9 cards)
Why must solicitors advise clients on funding options?
Paragraph 8.7, Code of Conduct: Clients must be given best information about pricing at engagement and as the matter progresses.
Good practice: Always mention alternative funding options.
Failure to advise may lead to:
Complaints and disputes
SRA disciplinary action
Non-party cost orders in court
Professional negligence claims
What should a private retainer letter include?
Scope of work
Client’s instructions
Hourly/fixed fees
Reporting duties on costs and progress
Termination conditions
Lien circumstances for unpaid fees
Compliance with Client Care Outcomes
What is a Conditional Fee Agreement (CFA)?
A “no win, no fee”
arrangement: solicitor paid only if client wins
May include a success fee uplift
Client may be liable for opponent’s costs if they lose
Clients should be advised to take legal expenses insurance
CFAs not allowed for family or criminal cases
What is a Damages-Based Agreement (DBA)?
Lawyer takes % of client’s damages if they win
Nothing received if client loses
Must comply with Damage-
Based Regulations 2013
Legal expenses insurance should be advised
What are fixed fees?
Used in non-contentious matters like conveyancing
Agreed fixed fee + VAT + disbursements
Fee fixed unless work scope exceeded
Who is eligible for civil legal aid?
Only for limited civil cases
Must pass:
Merits test: Strong case merits
Means test: Based on income, capital, outgoings
Recovered damages may repay legal fees (statutory charge)
Who is eligible for criminal legal aid?
- Police station attendance (under arrest or voluntary):
free legal advice - Court proceedings: Must apply for legal aid
Based on seriousness (interests of justice test)
Based on income (means test)
What is third-party funding (Litigation Funding Agreement - LFA)?
Commercial funder pays legal fees in exchange for a share in judgment/settlement
Funder gets nothing if claim fails
Most LFAs are DBAs and unenforceable unless they comply with DBA Regs 2013
What is legal expenses insurance?
Covers legal fees and opponent’s costs if client loses
Taken out after dispute arises
Commonly used with CFA, DBA, or third-party funding
