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Funding Options | LPC Help

904 words (4 pages) LPC Help Guide

1st Jun 2020 LPC Help Guide Reference this In-house law team

3.2 Funding Options

Our experts have prepared these LPC notes on clients’ funding options for you. If you would like one of our LPC-qualified experts to prepare a fully custom essay or an LPC coursework assignment for you, click here to place your order. Our LPC-qualified team can also draft clauses and contracts for you.

There are various ways of funding a claim and a solicitor should work with the client to find the most appropriate type.

Before the Event Insurance

Some insurance policies include legal expenses, which may cover both the costs of the client and the other party. A client should be advised to check the terms of existing insurance, for example credit card, car or home insurance, to ascertain whether any such insurance is both valid and suitable for that particular case.

A solicitor should check the terms of the client’s insurance policy in order to properly advise as to the its suitability.

Private Funds

It is of course, open to the client to pay the costs of the case from their private funds. Solicitors charge in units of time for which they will charge an agreed fee since litigation is notoriously expensive, it is more usual for commercial rather than private clients to fund their own litigation.

Funding by a Union or Association

If a client belongs to certain trade unions or associations, membership may include cover for any legal fees – in some cases, for both the client and their opponent. It is not unusual for the terms of the provision to require the use of panel solicitors and if so, the client should be advised to terminate the retainer and all relevant documentation should be forwarded to them to enable him/her to pass it onto the panel solicitors.

A solicitor should check the terms of the client’s insurance policy in order to properly advise as to the its suitability.

Public Funding

The Legal Services Commission (LSC) administers the civil legal aid fund through the Community Legal Service. Only those organisations, including solicitors’ offices, that have a contract with the LSC can undertake publicly funded work. In addition to using a contracted firm, to be eligible for public funding the client must pass both a means and merit test. They may be required to make a contribution to the cost of their case. More information regarding the relevant criteria for these tests is available on the LSC website at www.legalservices.gov.uk.

There are certain types of cases that are excluded from LSC funding. These include personal injury, probate, commercial and property trust cases. As such, a client wishing to pursue a case should be advised from the outset that public funding is not available.

Conditional Fee Agreements

Conditional Fee Agreements or CFAs, came into use in England and Wales in 1995 and are used as a method of funding, most commonly in personal injury cases. Sometimes referred to as ‘No Win – No Fee’, under these type of agreements, legal fees are only payable in certain situations. Both claimants and defendants are able to use CFAs.

There are a number of different types of CFAs. The most common form includes a success fee, whereby, at the end of the case, the client will pay their legal fees plus an extra ‘success fee’ or percentage uplift. Should the client lose, no fees are payable, although it should be noted that the client will usually be required to pay the costs of any disbursements – e.g. experts’ reports or court fees and may be liable for the costs of the other side.

Under the Courts and Legal Services Act 1990, there are various requirements in relation to CFAs. Firstly, the agreement must be made in writing. Next, CFAs must not be used for funding either criminal or family law cases. In addition, the maximum amount of the success fee cannot exceed 100% of the base costs. Further, under Rule 2.03 of the Solicitor’s Code of Conduct 2007, a solicitor must explain to their client when they will be liable for costs – this includes both their own costs and those of the other side. A solicitor must also inform their client of any interest that they have in the policy.

Under the Access to Justice Act 1999, success fees under CFAs can be recovered from the losing side.

After the Event Insurance

This type of insurance is often employed as a supplement to a CFA. This provides the client with insurance in the event that they lose the case and face an order requiring them to pay the costs of the other side. It may also cover the costs of their own disbursements. As its title suggests, this type of insurance can only be obtained once the ‘event’ – or dispute has occurred. This method of funding is often used as a last resort and clients should be advised to investigate all other options since the insurance will does not cover an award of damages or payment of a court order.


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