detailed notes and structure on methods of funding
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Course
LPC - Legal Practice Course
Institution
LPC - Legal Practice Course
Full and in-depth structure and notes on methods of funding. A highly detailed and clearly written step-by-step approach to understanding and answering exam questions. The document breaks down each element you need to cover to answer a question on . Contains extensive but easily comprehensible deta...
Para 8.7 SRA Codes states: that the client should receive the best possible information at the start of their matter about costs and
should be kept up to date on costs incurred.
Therefore, discussions about funding must be covered so that the client has all the information to make an informed decision
(8.6)
Conditional fee Agreements:
Under s58(2)(a) CLSA a solicitor and client can have an agreement that fees are to be payable only in specified circumstances
which will be based off whether the client wins or loses their claim.
The sol will receive either:
No fees or reduced fees = if C loses their case.
Normal fees or higher than normal fees (Success fee) = if C wins their case.
If the client is to pay fees, this is based off:
The solicitors normal hourly charging rate
(If paying the success fee) the fee earners hourly charging rate can increase up to 100%.
CFA’s can only be enforceable in they satisfy the requirements under s58 and 58A od the CLSA:
a. The CFA must be entered into for civil litigation matters – excluding family
b. The CFA must be in writing
c. The CFA must state the percentage in which the success fee will be if payable.
The client should be informed about:
If the client wins their case and D is ordered to pay costs The success fee cannot be included in sum claimed from D
in the costs order. It is the clients responsibility to pay the success fee.
If the client loses their case C will likely to ordered to pay D’s costs even if the CFA means C pays no fees or lesser
fees to their solicitor. In addition, C will still need to make payments towards disbursements throughout the process.
Should the solicitor enter into a CFA (only do this if applicable):
What are the chances of success
What are the likely damages C would receive
Hours spent on the case and time it will take to reach trial
The client’s assets.
After event insurance:
(more
NOTE:onCounsel
page 20may
parabe2)willing to enter into a CFA with a client – but expert witnesses cannot be engaged under a CFA.
If a client
More is concerned
on CFA about potentially having to pay o/s costs or about funding various disbursements throughout their case,
on page 18-20.
then the sol should advise on AEI.
This is a type of insurance which provides cover in the case that they end up having to pay the opponents costs and for their own
disbursements costs.
The policy content and premium provided will depend on the strength of the case and how much the client thinks they may want
for cover. An option for a client is to introduce a stage-by-stage premium to increase the cover as the case progresses.
The disadvantage for the sol – that even if the client obtains AEI to help pay for disbursements, the disbursements still need to be
paid intermittedly throughout the client’s case. In this case, the client may be able to obtain a bank loan to cover disbursements in
the meantime. Additionally, an AEI could loan the client a sum to cover disbursements and the AEI premium.
If the client wins – the interest on the loan can be deducted from the damages recovered.
If the client loses – unless agreed otherwise, the loan will need to be paid back.
Damages based agreement:
NOTE: If the solicitor assists in helping the client to obtain a contract of insurance, even if they merely introduce the client to an
insurance broker, theasolicitor
Under s58A(3)(a), will be carrying
damages-based agreementoutisaan
specified activity
agreement as contracts
between of and
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a clientarewhereby
‘specified investments
if the and the
client is successful
solicitor will bedamages,
and recovers ‘arranging’
it iswhich
agreedisthat
a ‘specified investment
a percentage activity’.will
of the damages To avoid breaching
be paid s19 FSMA,
to the solicitor thefees.
as their solicitor will need to
rely on an exclusion or exemption or s327 FSMA.
The DBA must satisfy the conditions under S58A(4) to be enforceable:
NOTE:a. C cannot recover any
The agreement mustpremium paid for AEI.
be in writing
b. The agreement cannot provide for a payment above the amount which, including VAT, is equal to 50% of the sum the
client recovers.
c. The terms of the DBA must specify:
a. The claim or proceedings which the DBA relates to
b. The circumstances in which the solicitors fees are payable, and
c. The reason for the percentage level agreed
If damages are recovered: the client cannot be required to pay an amount other than the agreed figure net:
1. Any costs and counsel’s fees that have been paid or are payable by the o/s by an Order/agreement, and
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