The cost of going to court: your options

September 2016

How do you pay your solicitor if you have to go to court? In this note I’m assuming you have not been successful in settling your dispute by  “Alternative Dispute Resolution”. This phrase is legal shorthand for “attempting to settle a dispute without going to court”.

Before the event insurance: It’s worth checking your insurance policies.  These days many household contents policies and other insurance products offer cover for legal expenses. Such policies differ in quality and scope but the best products allow you to instruct a solicitor of your choice in relation to a range of possible claims and dispute. Typically the policy will require a lawyer to certify you have reasonable prospects of success in relation to the claim.  The policy may place a financial limit on the amount of cover.This will normally provide for your opponent’s costs if you lose the case, as well as your own legal expenses.

Conditional Fee Agreement (“CFA”) This method of funding came into use during the 1990’s and has been popular, especially for personal injury claims.  But what is a  CFA?  The law defines it as “an agreement with a person providing advocacy or litigation services which provides for his fees and expenses, or any part of them, to be payable only in specified circumstances."   This means an agreement will be a CFA if a client pays different amounts to his solicitors depending on how the case is resolved.   So a CFA may specify the client does not have to pay his own solicitors for their work if the case is lost,  but if the case is won  the solicitors will be entitled to costs at their normal rate plus a success fee. The success fee reflects the risk the solicitor is taking with the case and is designed to compensate for the cases which are lost.

The definition of a CFA is flexible so that agreements can be tailored to reflect the type of case envisaged.  These agreements are sometimes  supported by policies of insurance known as “after the event” policies which pay out if the case is lost and the client is hit with an order for costs.   Paying the fees yourself: if you can’t take advantage of  “before the event insurance” and your case isn’t suitable for the other options mentioned here, you may have to pay for legal services yourself. Bear in mind there are still steps you can take to limit your outlay and minimise risk. You may be able to  agree fixed fees for different stages of work. You might be able to take out an insurance policy to cover the cost of losing your case and having to pay a bill for your opponent’s legal costs.

Damages Based Agreements  (DBA) introduced in April 2013 these agreements are the “new kid on the block” in terms of funding arrangements.  For many years payments to lawyers depending on results was unlawful. This changed with the introduction of CFA’s in the 1990’s. Now the government has gone further by allowing lawyers and their clients to enter in to agreements under which a legal representative will be paid nothing if the case is lost and if the case is successful the representative is paid a percentage of the compensation or damages received.   Bear in mind provision has to be made for the expenses of the case such as court fees, expert reports and similar items.  People entering into a DBA may be able to obtain “after the event” insurance to cover their liability under an adverse costs order should the case be lost.  Currently DBA’s are not common in the UK but they are another option to consider.

Other options: if you are a member of a trade union you may be entitled to funding from the union but this often depends on the type of dispute you are involved in.  Public funding or legal aid is now limited and subject normally to means testing.  For more information contact the author, Chris Shepherd.