DR: Funding Flashcards
(14 cards)
What are the main categories of funding available for legal work?
Private funding, professional funding, before-the-event insurance (BTE), community legal service (CLS), conditional fee agreements (CFAs), damages-based agreements (DBAs), after-the-event insurance (ATE), and third-party funding
What is private funding?
Clients pay solicitors directly from their own resources for legal work, common for routine tasks like conveyancing or wills
What is professional funding?
Legal services funded by a trade union or professional organisation, typically in litigation contexts such as union members defending professional negligence claims
What is before-the-event (BTE) insurance?
An insurance policy purchased before any dispute arises that covers legal costs (often including disbursements) in the event of a covered dispute, commonly bundled with home or motor insurance
What limitations apply to BTE insurance cover?
Policies often cap the maximum cover or pay a stated proportion of costs, and premiums (usually <1% of cover) are not recoverable from a successful opponent
What is community legal service (CLS) funding?
Publicly funded assistance (formerly Legal Aid) for individuals meeting strict means and merits criteria, available for limited categories of civil claims and broader criminal work
What criteria determine eligibility for civil CLS funding?
The client must be an individual, have a qualifying type of claim (e.g., certain family or homelessness disputes), meet means thresholds, and have a meritorious case
What is a conditional fee agreement (CFA)?
A ‘no win, no fee’ arrangement where the solicitor receives a basic fee plus a success fee (up to 100% of the basic fee) if the case succeeds; success fees capped at 25% of non-future losses in PI cases
What are the funding gaps not covered by a CFA?
Expert fees, court fees, and other disbursements are not covered by a CFA and require separate funding (e.g., ATE insurance)
What is a damages-based agreement (DBA)?
A ‘no win, no fee’ arrangement where the solicitor’s fee is a percentage of recovered damages (capped at 25% of non-future losses in PI, 35% in employment, 50% in other cases) and does not cover disbursements or opponent’s costs
What is after-the-event (ATE) insurance?
Insurance taken out after a dispute arises to cover the client’s disbursements and opponent’s costs if the case is lost, typically used alongside CFAs or DBAs; premiums often exceed 25% of cover and are not recoverable
What is third-party funding?
Independent funding by entities (e.g., banks, private equity firms, hedge funds) for litigation, where the funder is repaid with an uplift if the claim succeeds; mainly used in high-value commercial cases
What factors should a solicitor consider when advising on funding options?
The solicitor must identify all reasonable funding avenues (e.g., BTE insurance) and discuss them with the client to ensure the most appropriate and cost-effective option is chosen
What are the main methods of charging a client for solicitors’ services?
Hourly charging, fixed fees for defined tasks, and unbundled legal services (where solicitors handle discrete tasks only) to help control costs
