Funding your case

 Risk Sharing

• Conditional fees (No Win No Fee) – In this type of arrangement if you lose your case, we will make no charge in respect of its costs, but you will have to pay your own disbursements and your opponent’s legal costs. If you win, your lawyer is entitled to charge a success fee on top of the normal hourly rate. Your opponent will not be ordered to pay any part of the success fee but rather it will be paid out of any damages awarded in the case.
• Hybrid Conditional fees – In this type of arrangement, a proportion of the work carried out (e.g. 50% will be charged in accordance with our usual retainer terms) i.e. paid on an hourly basis and at the end of each month, and the balance will be subject to conditional fees (i.e. only charged if you win). This is becoming an increasingly popular arrangement; not least because it requires that there is a fairer sharing of the risk between the client and the firm.
• Contingency fees/damage-based agreements – In this type of agreement, you will again not be charged any costs if you lose the case. If you are successful you will be charged a percentage of that recovered as agreed at the outset but which cannot be more than 50% (25% if a personal injury case) your recovery.
• Contingent fees – It is also possible to agree that we will charge you on the basis of an hourly rate if your case is won, but that the rate will be reduced if your case is unsuccessful.

It is important that you understand that, if we do enter into such an arrangement, the definition of success in relation to your case must be agreed and clearly set out.

It is also important for you to appreciate that, prior to any such arrangement being agreed, we may have to carry out a risk assessment exercise to determine whether we are prepared to take your matter on any of the above ‘risk-sharing’ bases.  If so, the risk assessment may be charged at our usual hourly rates and which would need to be paid before any risk sharing arrangement is entered into.  Often, it is only after the risk assessment has taken place that we can we decide whether we are willing to take on the matter on a conditional, contingency or contingent fee arrangement.

We will also be entitled to carry out further risk assessments during the course of the matter and, if any issues arise which affect the prospects of success, we will review whether we are prepared to continue to carry on with the arrangement in place.

Third Party Funding

Third-party litigation funding is a practice where a third-party who is not involved in a lawsuit provides financial assistance to a litigant in exchange for a share of the potential recovery from the claim. The third-party may also offer indemnity insurance or take over litigation. The funding may be secured or unsecured and may cover individual or complex commercial litigation. The practice originated in Australia and has expanded to other regions.

This practice offers businesses a means of pursuing viable litigation, arbitration or adjudication claims while preserving liquidity and minimizing risk. Use of third-party funding is becoming increasingly mainstream in a number of jurisdictions around the world, with courts such as in England particularly open to funding as a means of improving access to justice. However, the rules governing the use of third-party funding are jurisdiction-specific, and care should be taken around compliance.

Insurance

There are two types of insurance which may be available to fund litigation:

a)    A pre-existing insurance policy (“before the event insurance”)which provides cover for legal expenses.  This can be a policy covering just legal expenses.  It is also, however, now relatively common for legal expenses cover to be included in a standard home or motor insurance policy. However, such policies are frequently limited in what they cover and may include restrictions on your freedom of choice of lawyer.  We recommend that you look at the insurance policies which you have in place to check whether or not legal expenses insurance is included.  We will be happy to advise you on this point if you wish us to do so.  Indeed, if in doubt, we strongly recommend that you let us have a copy of the policy.

b)    Insurance policies which are taken out to provide cover for the cost of litigation after a dispute has arisen (“after the event insurance”).  The premiums for these policies depend on a number of factors, most importantly, the amount of cover required.  These policies can provide protection against the possibility of you having to pay the total costs of litigation in the event that you lose a case.  Insurance cover can be purchased in respect of your opponent’s legal costs, your own disbursements (including Court fees, Counsels’ fees and experts’ fees) and also your own legal costs.  It is usual for these policies only to pay out in the event that you lose your case completely.  In certain circumstances, the payment of the premium can be deferred until the end of the case when it is hoped (but cannot be guaranteed) that you will have the damages from which to make the payment (see below).

It is almost invariably a requirement that, as part of completing the proposal form, a copy of Counsel’s written opinion on the merits of the case is provided.   This will have to be obtained and paid for on the basis set out in our retainer letter.

In considering this type of cover, it is imperative that you ascertain how you will be able to fund the premium. If the premium is deferred it will be payable out of your damages.  Alternatively, if not deferred, it will be payable at the outset.