Claims Funding Factsheet

Introduction

The subject of how to pay for legal fees to bring claims is a complicated one and Salmons Solicitors have prepared this fact sheet to guide you through the various funding options available. This fact sheet applies to the following types of claim :-

• Personal Injury Claims (including claims to the Motor Insurers Bureau for uninsured drivers)
• Clinical Negligence Claims
• Injury Claims against the Motor Insurers Bureau (for untraced drivers)
• General Litigation Claims
• Employment Claims
• Claims against the Criminal Injuries Compensation Authority (for victims of crimes of violence)

The expenses of such claims may consist of three types of expense. Firstly, solicitors fees and VAT, secondly, barristers fees and VAT and thirdly other expenses (we call these “disbursements”) and VAT.

The Availability of Legal Aid or Community Legal Service Funding

In April 2000 Legal Aid became known as the Community Legal Service Fund (CLS Fund for short) and what was formerly known as Legal Aid Advice and Assistance became known as Legal Help. What was formerly Legal Aid became known as Legal Representation.

For all types of legal aid covered by this note, you will have to be financially eligible. Even if you are financially eligible, depending upon the type of case it is, you may not get state funding.

Legal Help (Advice & Assistance)

Legal Help is still available for claims against the Criminal Injuries Compensation Authority, for employment cases and for some general litigation claims. This is available for people on low income. We can assess eligibility and make this form of legal help available to you. It is generally limited to cover basic advice only. If a claim is successful and you ultimately recover compensation, you may have to repay out of your compensation the costs claimed under legal help. For medical negligence, and personal injury claims, see below. These must be of sufficient benefit to you to justify the expense of public funds. Legal Help is available to cover claims based on allegations of sexual assault and claims based on allegations of abuse of a child or vulnerable adult.

Legal Representation

Legal Representation is not available for Criminal Injuries Compensation Claims and most employment claims. Legal Representation is not available for personal injury claims except clinical negligence. The following types of case are excluded from Legal Representation (and from Legal Help):-

• All personal injury claims unless an exception applies
• Boundary disputes
• Matters of trust law
• Defamation and slander cases
• Company and partnership law and any matter arising out of the carrying on of a business
• Conveyancing disputes
• Dispute regarding a Will

Even if you are financially eligible for state funded Legal Representation, and your case is not one of the excluded cases listed above, the Legal Services Commission can still refuse to help you if :-

1. Your case is highly likely to succeed and would therefore be appropriate for funding under a no win no fee agreement (see below).
2. It does not satisfy something called the “costs/benefits test”. If a case has a fifty to sixty percent chance of success, the “costs/benefits test” is satisfied if compensation exceeds costs by a factor of four. For cases having a sixty to eight percent chance of success, the “costs/benefits test” is satisfied if the compensation exceeds the costs by a factor of two. If the prospects of success are eighty percent or more the “costs/benefits test” is satisfied if compensation simply exceeds costs.

There are a number of exceptions to these restrictions.

1. Cases involving serious wrongdoing against a public authority.
2. Clinical Negligence. Many people do not qualify financially for CLS Funding (legal aid) and we fund such claims without resort to the Community Legal Service Funding Scheme. Some of our clients prefer this alternative method of funding to state assisted funding. If you require state assisted funding, we can provide you with the name and address of another firm of solicitors. Legal aid is still available for clinical negligence work.
3. This applies to housing and family cases. Please ask for more information, if you feel you have a housing or family case which needs funding.
4. Mixed Cases. This exception applies where some services are fundable and some are not.
5. Cases with a significant wider public interest.
6. Very expensive cases – a decision is made individually by the Legal Services Commission.
7. Mental Health cases.
8. Cases where it would be practically impossible to proceed with the case without representation or there would be unfairness.
9. Claims based on an allegation of sexual assault or on the abuse of a child or vulnerable adult.

Even if you obtain a Legal Representation Certificate you may have to pay a monthly contribution until the case finishes. If you win, some or all of your costs may be recoverable from your opponent. The amount recoverable depends upon the value of the claim and the amount and type of work done. A greater percentage of costs are recoverable the less work is done. Legal fees and expenses which cannot be recovered are normally payable out of your contribution or out of your compensation or both. This is known as the statutory charge. If you lose a state funded case, it is unlikely that you will have to pay your opponents legal fees whilst you were state funded, unless you ask us to conduct the case unreasonably.

Private Rates

When a solicitor provides a service to a client, the solicitor can charge for the amount of time spent on a client’s case by reference to an hourly rate. Letters, phone calls, meetings, reading, thinking and writing time are all recorded and charged for at this rate. Letters written and telephone calls made or received are charged at fractions of the hourly rate, usually at units of one tenth of an hour. Details of the hourly rates are available on request. They differ depending upon the seniority of the person handling your claim. These are also known as “basic costs” in the paragraph dealing with no win no fee agreements.

Union Funding

You may be injured at work or require advice about employment law and be a member of a trade union. Your union will have their own solicitors who may take on your case at little or no cost provided you were a union member when the incident occurred which gives rise to the need for advice. Union solicitors may prefer to deal with the stronger easier cases because in some circumstances they do not get paid if they lose.

Pre-Paid Insurance Funding

You may have a policy of insurance which covers the costs of your bringing a claim. You will have already paid an insurance premium for such a policy. You should check your policy wording carefully. If you do not understand your policy, we can help you, but we need to see the policy wording. Legal expenses cover may be  available in household buildings or contents policies, motor policies and with travel insurance. Some credit cards also have legal expenses insurance. You do not have to have the insurance company’s choice of lawyer forced onto you. These lawyers may not be  local. If you prefer face to face meetings with your solicitor, and the ability to call in to drop off documentation etc or to see how your case is getting on, the insurance company’s choice of lawyer may not be for you. You have the right in law to choose your own lawyer and to have your insurance company to pay for it if pre-paid insurance funding is available. We can help you write a letter to your insurers in your name to request they appoint Salmons to deal with the claim and they may agree to do so.

You should also be aware that the likelihood is that your panel solicitors may have made a payment of several hundred pounds to your insurer in return for the recommendation. This may affect the amount of work which your panel solicitor is prepared to do for you.

Contingency Fees

A contingency fee is a method of paying for your solicitor where the amount you pay your solicitor depends upon the outcome. Some claims do not involve claims made in a Court of Law. Examples are claims to an employment tribunal, claims to the Criminal Injuries Compensation Authority and claims to the Motor Insurers Bureau in respect of a road traffic accident caused by an untraced driver. Where you have a claim which consists of one of the above three categories of claim, a contingency fee agreement may be for you. Typically, these agreements provide for no fee (apart from an administration fee) in the event that the claim fails, but provide for you to pay a percentage of your compensation plus out of pocket expenses in the event that the claim succeeds. The percentage is typically twenty five or thirty three percent.

These agreements are not suitable as a method of funding claims brought in a Court of Law. If it is likely that legal proceedings will need to be issued, it will not be appropriate for a solicitor to offer a contingency fee agreement to a client in a case where there is a reasonable expectation of securing a costs order or agreement to pay costs by an opponent. Contingency fees are only appropriate where it is unlikely an opponent can be ordered to, or will agree to, pay your legal fees.

There is no opponent in a Criminal Injuries Compensation case or a Motor Insurers Bureau (untraced driver) case so you would not have to pay your opponents fees even if you lost. In an employment tribunal case, whilst there is an opponent, it is unlikely that you would have to pay your opponents fees even if you lost the case (unless you conducted the case unreasonably). However since there remains a remote possibility, you should consider whether you would prefer to have insurance against this remote chance. If you require insurance against the risk of paying your opponents costs in an employment tribunal case, please ask for details.

Conditional Fee Agreement with Success Fee ('No Win, No Fee')

When you hear the phrase “no win no fee”, this is normally the type of agreement which is being referred to. This is available for reasonably strong cases, namely those cases that have prospects of success of at least 55 to 60%. We must first assess the prospects of success for which information and evidence may be required. Once a conditional fee agreement is signed, we are paid if we win, when we win, and we are not paid if we lose. If we win we receive, in addition to our basic costs calculated at private (hourly) rates, a success fee which is a percentage increase on the basic costs. The success fee is assessed on the chances of success and the risks in a case. The success fee is normally reimbursed by your opponent who, more likely than not, may be ordered to pay the amount of the success fee, either in full or only in part and if you only recover part (following a court decision on the recovery of your costs from your opponent), we will reduce our success fee to the fee you are actually awarded by the court. If we lose there is no success fee and no basic costs to pay under such an agreement.

If the claim fails you may have to pay your opponent’s fees and expenses and you need to insure yourself against this risk. We can sell you an insurance policy for this purpose. The policy is Accident Line Protect Plus and it is the only one recommended by The Law Society. It is made available to firms such as Salmons who are members of The Law Society’s Personal Injury Panel and members of The Accident Line Scheme. If you are reading this note and you have access to the internet type into your browser or click on the following link http://www.accidentlinedirect.co.uk/choose.php to learn more about Accident Line.<

The insurance is expensive but the premium is split into two parts, an initial premium and a second premium incurred just after court proceedings are issued ( not all cases get that far though!). The premiums are conditional and paid at the end of the case and then only if you win. We then try to recover the premiums as part of the legal costs recoverable if we win and invariably we do recover the premiums in full.

If the claim fails, you can make a claim on the insurance policy even though in that circumstance the premium has not been paid to the insurer. The insurance will also pay the costs of the other side if there are any to have to pay, up to the upper limit of £100,000. It is your agreement to pay the premium if you win which allows the insurer to reimburse you if you lose even if you then have not paid the premium at all.

In addition to our own fees there are also barrister’s fees and disbursements which were mentioned at the start of this information bulletin. There are two choices with regard to barrister’s fees. You can either pay your barrister yourself or we can ask the barrister to work for you under a No Win No Fee Agreement. The disbursements must still be paid by you in any event. If you cannot afford to pay for the disbursements, we will be able to provide you with free or low cost loan facility. In the event that the claim succeeds, you will be expected to pay off the sum which you have borrowed from the costs you recover from your opponent. In the event that the claim fails you can claim on your insurance to repay those expenses which have been incurred. There is a limit of £100,000 per claim on the insurance.

In some cases we charge interest and an arrangement fee on any sums loaned to you to pay expenses. If you lose you can claim the interest on the insurance. If you win you pay any interest we have charged you, and the arrangement fee. The arrangement fee is £50 plus Vat.

A No Win No Fee agreement is normally appropriate where an opponent might be ordered to pay your legal fees and can afford to do so or has insurance to enable him to do so. These cases are cases such as personal injury claims, general litigation claims and claims against the Motor Insurers Bureau in respect of an uninsured, identified driver. It is not appropriate for Motor Insurers Bureau (Untraced Driver) claims, employment claims and claims against the Criminal Injuries Compensation Authority.

Some medical negligence cases with excellent success prospects can be funded under a No Win No Fee Arrangement and backed by an insurer other than Accident Line Protect Plus.

In short, if you lose (provided you tell the truth and co-operate with us) it is very unlikely that you will pay anything at all provided the insurance claim on Accident Line Protect Plus does not exceed £100,000. You may also have to pay something if you reject an offer made to you by the opponent and then change your mind. If you win you may not recover 100% of your compensation, but since we are personal injury specialists we will attempt to maximise your compensation and only advise a settlement if the offer which you receive is fair and reasonable. Some firms involved in this work advise that low offers are acceptable just to settle the case and recover their fees.

Expenses Funding and Insurance Premium Funding

Do not worry if you cannot afford to pay the expenses such as doctors fees, Court fees and the like. We may be able to provide loan facilities to you at a competitive rate of interest or, in some cases, at a zero per cent rate of interest.

If the claim succeeds, and you then go on to recover your legal fees including your expenses from your opponent, you can pay the loan back from the money you recover.

In the event that the claim fails, you may be able to claim on the insurance to repay to you what you have borrowed from us to pay expenses. Policy conditions attach. In the case of Accident Line Protect Plus, (the insurance attached to Conditional Fee Agreements With Success Fee), you may be able to claim on the insurance for the expenses:-

• where the Court makes no order as to costs
• or orders you to pay the costs,
• or when you, we and the insurer agree to discontinue after proceedings have commenced
• or where a claim is abandoned after a letter of claim has been sent.

It is normally the case that the claim must be wholly unsuccessful to claim on the insurance though failing to beat at trial an earlier Defence offer made to settle your case is an exception to that.

If you lose and you do not have any form of insurance you will have to pay the loan back over a number of months. Interest which we charge on some loans will always have to paid by you unless you lose a case funded under a no win no fee arrangement, in which case you may be able to claim on Accident Line Protect Plus.

Finally

If you have any questions, please ask. We appreciate that this subject can be complicated.

Copyright
Salmons Solicitors
2011

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