Funding Options for Legal Services

Vocabulary practice flashcards covering legal funding options, SRA professional conduct rules, and statutory requirements for the SQE1 syllabus.

The Retainer

The contractual relationship which exists between solicitor and client, establishing the fees, charges, and manner of payment at the outset.

Costs (SRA Glossary Definition)

The combination of the solicitor’s fees and disbursements.

SRA Code of Conduct Paragraph 8.7

Provides that a solicitor must give clients the best possible information about how their matter will be priced and the likely overall cost both at engagement and as the matter progresses.

Private Funding

The traditional funding method where fees are calculated according to time spent at a given hourly rate, for which the client is personally responsible regardless of the outcome.

Fixed Fee

An agreement to complete work for an established amount established at the outset which, under Inventors Friend Ltd v Leathes Prior [2011], cannot be altered later unless the client agrees.

Contentious Business

Business done for the purposes of proceedings begun before a court or arbitrator, officially starting once proceedings have been issued.

Non-contentious Business

Any business done as a solicitor which is not contentious business, including conveyancing, commercial drafting, or resolving claims via online pre-action portals.

Non-contentious Business Agreement

An agreement under $s\,57$ of the Solicitors Act 1974 that must be in writing and signed by the client to regulate remuneration for non-contentious work.

Contentious Business Agreement

An agreement under $ss\,59-63$ of the Solicitors Act 1974 where a solicitor is seeking to enforce the agreement for contentious work and must first seek permission from the court.

Conditional Fee Agreement (CFA)

Defined by $s\,58(2)(a)$ of the Courts and Legal Services Act 1990 as an agreement where fees and expenses are payable only in specified circumstances, such as successful litigation.

Success Fee

An enhanced fee in a CFA expressed as a percentage increase of the solicitor's normal hourly rate, capped at $100\%$ of normal charges.

CFA Personal Injury Cap

An additional cap in personal injury cases where the success fee cannot exceed $25\%$ of the general damages recovered.

Damages-Based Agreement (DBA)

An agreement where the solicitor’s fee is linked to the level of compensation obtained, as defined by $s\,58AA(3)(a)$ of the Courts and Legal Services Act 1990.

Contingency Fee

The payment in a DBA that is contingent upon success and usually calculated as an agreed percentage of the damages recovered.

DBA Fee Cap

The maximum payment allowed under a DBA, which (including VAT) is equal to $50\%$ of the sums recovered, or $35\%$ for employment cases and $25\%$ for personal injury general damages.

Hybrid-DBA

An arrangement authorized in Zuberi v Lexlaw Ltd [2021] where a firm receives concurrent funding via a DBA and another form of retainer, such as discounted hourly rates if the client loses.

Before-the-event (BTE) Insurance

Insurance policies, such as household or motor insurance, purchased before a dispute arises that may cover legal expenses.

After-the-event (ATE) Insurance

Insurance taken out after a dispute has arisen to cover the client's liability for disbursements and the opponent's costs in the event of losing.

Third Party Funding

Also known as litigation finance, where a specialist company with no other connection to the case funds the litigation in return for a fee from the money recovered.

Arkin v Borchard Lines Ltd [2005]

The case that paved the way for third party funding by affirming that commercial funders facilitate access to justice.