Funding Options for Commercial Litigation Legal Costs
Pursuing or defending a claim in the civil courts can be daunting and uncertain. At JMW, we provide clarity on the main ways in which litigation may be funded if you’re involved in a commercial dispute.
The majority of our commercial litigation work is privately funded and we will usually require a payment on account of our fees before we start work on your behalf. We do not undertake any legally aided work.
Other funding options may be available in limited circumstances, depending on certain factors such as the value and complexity of the dispute, its prospects of success, the likely costs, the opponent’s ability to meet any judgment and the overall commercial viability of the case.
Our experienced team of litigation lawyers is here to assess the merits of your legal position and advise on your potential funding options. To speak to a member of the commercial litigation team about your circumstances, call us today on 0345 872 6666, or fill in our online enquiry form to request a call back.
Paying your legal fees on a privately paying basis
Under a traditional private retainer, we provide an estimate of our anticipated legal fees for each stage of the matter. Once we have received your instructions and any requested monies on account, we undertake the work required on your case and charge for the time spent at our agreed hourly rates.
Our hourly rates vary according to the level of experience of the solicitor carrying out the work on your behalf, and we will discuss with you the appropriate level of solicitor to assist on your case. You will remain responsible for our fees and disbursements on a privately paying basis.
Paying your legal fees on a fixed-fee basis
We may agree to undertake the work on your matter on an agreed fixed-fee basis where the scope of the work can be clearly defined and the amount of work involved can reasonably be predicted. We will confirm in writing what the fixed fee covers and any work that falls outside that scope.
Conditional Fee Agreements (CFA)
A CFA is an agreement under which some or all of our fees depend on the outcome of the dispute. It is commonly known as a ‘no win, no fee’ agreement. We only offer CFAs in limited circumstances and they should not be regarded as generally available.
Under a CFA, if your claim is successful, you will be liable to pay our legal fees together with a ‘success fee’, which is expressed as a percentage uplift on our standard hourly rates (to be defined in the terms of the CFA and agreed with you), plus any disbursements.
If your claim is unsuccessful, no legal fees will be payable to JMW but you may have to pay the successful party’s costs and disbursements, plus your own disbursements, subject to having suitable insurance in place to protect against that risk.
We are not obliged to offer a CFA. Before deciding whether a CFA may be appropriate, we would need to consider the merits of your claim, its value, the likely costs and proportionality, together with the risks associated with the litigation, as well as the opponent’s ability to meet any judgment and costs order. The case would need to have sufficient value and prospects of success to make the arrangement commercially viable. We would usually charge for an initial assessment on an hourly-rate basis and any work carried out prior to a CFA would be payable by you on a private basis.
Partial Conditional Fee Agreement
A partial or discounted CFA is an arrangement under which you pay an agreed proportion of our standard hourly rates as the claim progresses, and we defer the balance until the outcome of the case is known.
If you succeed (as defined by the terms of the CFA), you will be required to pay the balance of our fees (for example, the remaining 50% of our standard hourly rates) plus a ‘success fee’, together with any disbursements.
Damages Based Agreements (DBA)
Under a DBA, our legal fees are calculated as an agreed percentage of the damages recovered if the claim succeeds. If the claim is unsuccessful, you will not usually pay our legal fees, although you may be responsible for disbursements and the opponent’s costs unless suitable insurance or another arrangement is in place. We only consider DBAs in exceptional cases where the merits, value, likely costs, recoverability and overall commercial viability justify the risk. A DBA is not available simply because a client is unable or unwilling to fund a case privately and we are not obliged to offer one.
Third-Party Funding
Third-party litigation funding is provided by an independent funder, which may agree to provide capital investment to fund some or all of the solicitor’s fees, barrister’s fees and disbursements in return for an agreed payment if the claim succeeds. It is generally considered only for cases with sufficient value to make the funding arrangement commercially viable.
Upon a successful outcome, the third-party funder typically receives a return on their investment plus a substantive fee, which is usually based on a multiple of the investment sum or a percentage of the damages awarded in consideration of the financial risk they have taken in pursuing the claim.
It is the third-party funder, not JMW, that decides whether to offer funding and in considering whether or not to provide funding, it will usually consider the merits of the case and the prospects of success, the value of the claim, the opponent’s ability to pay and the likelihood of recovery. Ultimately, a third-party funder needs to have some certainty that if they do invest in the claim, there are sufficient prospects of a successful outcome and of making a successful recovery of their investment. In the event the claim is unsuccessful, the funder will lose its investment, subject to the terms of the funding agreement.
We have access to suppliers of litigation funding that are available for claims over a certain value, as well as leading funding brokers who can review the market for suitable third-party funding. The funding may be subject to a minimum claim value, positive advice from counsel and suitable ‘After the Event Insurance Policy’ (ATE). Any work carried out before funding is approved will be payable by you on a private basis unless we agree otherwise in writing.
If you would like more information about third party funding, please call us on 0345 872 6666.
Legal Expenses Insurance
After the Event insurance (ATE)
ATE is a legal expenses insurance policy that is designed to cover some or all of your opponent’s costs and disbursements (known as adverse costs), up to a certain level, if the claim you are pursuing or defending is unsuccessful. The precise level of cover, exclusions and premium will depend on the policy terms.
ATE insurance is generally used by claimants only but some ATE providers offer cover to defendants in litigation.
In addition to providing cover for your opponent’s costs and disbursements, some ATE policies also provide cover for the disbursements that you incur in pursuing your claim, and some ATE providers also provide cover for an element of your own legal fees.
ATE cover can reduce the financial risk of an adverse costs order, but it does not remove every litigation risk or necessarily cover all sums payable. We can help you explore whether suitable ATE cover is available and explain the scope of any policy proposed but you should consider policy terms carefully.
Depending on the nature of the policy, an ATE policy premium may be deferred and may only be payable if the claim succeeds. The amount and timing of the premium, and whether anything is payable following an unsuccessful outcome will depend upon the particular policy terms.
ATE policy premiums cannot be recovered from your opponent unless your case involves publication or privacy proceedings.
Before the Event Insurance (BTE)
Before the Event insurance is a form of legal expenses insurance cover that may be included within an existing personal or business policy. You should check relevant policies and tell us if you think cover may be available. Some insurers require the use of a panel firm or prior approval of your chosen solicitors. Unless and until the insurer confirms cover for our work, you will remain responsible for our fees and disbursements on a privately paying basis.
To find out more about how JMW can help you with your options for funding your dispute, call us on 0345 872 6666, or complete our online enquiry form and a member of the team will call you back.