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When looking at funding a court action, the following options are available to you:

Private fee paying – This is where all costs are funded by you – although there may be a possibility of recovering a proportion of these from your opponents

Conditional Fee Agreement – This is an agreement where your Solicitor agrees to act on your behalf on the basis that no fee will be charged if the case is not successful but beware; if you lose you may still have to pay the other side’s costs. This risk can sometimes be covered by a special kind of insurance.

Legal Expenses Insurance - You may have Legal Expenses Insurance attached to an insurance policy, which may protect you against potential liability for your solicitor’s expenses, the other side’s expenses and fees if the case should be lost. Check whether your Policy provides such cover and whether your insurers are prepared to agree to indemnify you.

Contingency Fee – this is the classic “no win no fee” arrangement. Your Solicitor’s fees depend, or are contingent, upon there being some financial recovery or award in the case. The payment is then a percentage of the amount recovered—such as 25 percent if the matter is settled, or 30 percent if it proceeds to trial. Contingency fee agreements are valid only in civil cases and are most often used in personal injury cases and in claims against employers. Court rules and statutes often regulate these fees in relation to the type of action and amount of recovery. Such an arrangement is generally used when the party making the claim cannot afford to pay a solicitor and therefore would not have any effective means of prosecuting a claim. A contingency fee agreement allows for a deduction to be made from any damages award towards costs. The difference between a Contingency Fee Arrangement and a Conditional Fee Agreement (CFA) is that, under a CFA, a solicitor can charge his client the usual charge out rate, plus a success fee, if he has pursued his clients’ case successfully, whereas under a Contingency Fee Agreement the solicitor’s fees are based upon a percentage of the winnings. The success fee, in a CFA, can be as high as 100% of the usual charging rate, but under both a CFA and a Contingency Fee Arrangement, if the case is not successful then no fee, or a reduced fee, may be payable.

Third party funding – Third party funding is an alternative method of litigation funding where a commercial funder with no connection to the proceedings will pay some or all of the costs of your case in return for a share of any money awarded in damages if you win your case. It is available to both claimants and defendants with a counterclaim and can cover arbitration as well as court proceedings. Third party funders will fund both your legal fees and disbursements on an ongoing basis. In addition, they will bear the risk in terms of your opponent's costs of the litigation by offering an indemnity or paying for an insurance policy which should meet your costs if the case is unsuccessful. This arrangement differs from a conditional fee agreement with after the event insurance (where a client is required to fund disbursements throughout the case although the insurer will refund them if it is ultimately unsuccessful).

For more information please contact Richard Tomlinson at Lawson-West Commercial on 0116 212 1000.