Traditionally, solicitors charge on a time basis where the client is billed for the time spent dealing with the case and pays these charges as the case proceeds. However, there are other possible fee arrangements and funding options that are available.
Before the event legal expense insurance (BEI)
The first thing you should consider is whether you already have any existing legal expense insurance. An example of this is professional indemnity insurance but cover can also be provided in financial products that you might not expect to provide cover such as household or motor insurance policies that you or others that you live with may have. If you do have such insurance and you are defending a claim, you should give your insurers notice as soon as circumstances arise that might give rise to a claim against you.
Conditional Fee Arrangement (CFA)
Under a CFA you do not pay any fees to us or you pay lower than our normal fee if your case is lost but pay higher than our normal fee if your case is won. Our normal fee is based on the hourly rates that we usually charge and the fee payable on success is a percentage increase on this up to a maximum of 100% (e.g. £0 if you lose, £225 per hour (an example normal hourly rate) plus 100% success fee = £450 per hour if you win).
Because we would be taking on an element of risk in entering into a CFA, we will need to carry out a thorough review of the evidence and prepare a risk assessment before we can take a view on whether to agree to enter into the CFA and, if so, what the success fee should be.
It is important to note that the usual costs rule that the loser pays the winner's costs does not apply to the success fee element of the charges. This element of the charge will therefore eat into any damages recovered.
This type of option may be attractive where the merits of your case are strong and there is limited funding available for fees as you will not have to pay our normal charges in the run up to trial. You will however need to fund your disbursements (out of pocket expenses including court fees, barristers' fees, and experts' fees) and will usually be liable to pay your opponents' costs under a costs order if you lose. However, after the event legal expense insurance may be available to help with this (see below).
After the event legal expense insurance (AEI)
With traditional time based charges, this type of legal expense insurance will pay for your solicitors' fees and disbursements in the run up to trial. If you lose, you will not have to repay these costs and the insurance will also cover any liability you incur in having to pay your opponent's costs under a costs order. You will not have to pay the insurance premium up front and it will not be payable if you lose. It will only be payable if you win after the trial at a time when funds may be available from your opponent from the payment of any judgement or costs order made by the court. However, it is important to note that the liability to pay the premium remains regardless of whether any payment of any judgement or costs order is actually recovered from your opponent.
AEI is also useful when used in conjunction with a CFA. It will fund your disbursements in the run up to trial and these will not be repayable if you lose (in the same way that our costs will not be payable if you lose in a no win no fee CFA). The premium will only be payable if you win in the same way as described above when AEI is used with traditional time based charging arrangements.
As insurers will be taking on significant risk, they often require a thorough consideration of the evidence and strong assessment of merits from an independent barrister before they are willing to proceed. It should be noted that premiums can be high and are not recoverable from your opponent. This means that it may significantly eat into any recovery made from your opponent.
Damages based agreement (DBA)
These are agreements where we are paid a percentage of the damages recovered. The percentage cannot exceed 50% of the damages recovered less any barristers' fees. The actual percentage applied will be calculated based on an assessment of the chances of success after a thorough review of the evidence.
A DBA can be combined with AEI in the same way as with a CFA to provide cover for your disbursements and any costs order should you lose at trial.
Third party funding
If you are a member of a trade union or a professional body, they may provide you with funding for legal expenses as part of the benefits of membership.