Funding for civil claims – know your options

In litigation, the general position is the loser pays the winner’s costs.

‘Costs’ can be broken down into:

(1) The costs of instructing your own representatives, and

(2) The opposing party’s representative’s costs.

Below are some methods for you to consider when looking to fund a case, and the respective costs implications.

Legal Aid

There are two types of public funding:

1. Legal Help funding – which entails initial advice and assistance, and the carrying out of investigatory work.

2. Legal Aid funding – this is either investigative representation (investigating a potential claim, where additional work is required to assess the case’s merits), or full representation (required if the claim is to be formally ‘issued’ at court).

The eligibility thresholds imposed by the Legal Aid Agency are very strict, and vary according to the type of funding being sought.

For Legal Help funding, the guidelines can broadly be summarised as below:

· Your gross income must not exceed £2,657 per month. Note: if that you have a partner with whom you live as a couple, then typically their means will be aggregated for the purposes of the financial determination.

· Your disposal income must not exceed £733 per month. Fixed allowances in deductions from the gross income are made for your partner and dependents (if relevant), for employment expenses, income tax, NI, housing costs, maintenance paid, child-care costs incurred because of remunerative work or a course of study outside the home, and criminal legal aid contributions.

· If you are directly or indirectly in receipt* of what is known as a ‘Passporting Benefit’, then you automatically qualify on the income test. These benefits include income support, universal credit, income-based job seeker’s allowance, income-related employment and support allowance, or guarantee credit. *To be indirectly in receipt requires you to be included in the benefit claim of someone else.

· Your disposal capital must not exceed £8,000 for civil legal services which are not in respect of an immigration matter.

If your disposal income and capital fall within the relevant limits, then you will be eligible for Legal Help funding.

For Legal Aid funding, the same limits when determining financial eligibility as for Legal Help apply. However, you might have to pay contributions towards the funding, where the amount payable is calculated by reference to either your monthly disposal income or disposal capital.

Further, there are a variety of criteria which must be demonstrated to the Legal Aid Agency in order for them to award the funding. These include the requirements:-

• That there is no other source of funding available;
• That there is no other person, including one who might benefit from the proceedings, who can reasonably be expected to bring the proceedings;
• That the case is unsuitable for a ‘Conditional Fee Agreement’ (discussed below);
• That all effective alternative remedies have been exhausted (such as a complaints or ombudsman scheme);
• That there is a need for legal representation in the circumstances; and
• That the case is proportionate, when weighing up the prospects of success against likely costs to be incurred.

The implications of being awarded legal aid mean that if you win your case and costs are recovered from the other side, you are likely to have to pay nothing, but if you lose, you are afforded protection from adverse costs risks, meaning you are unlikely to be pursued for the opponent’s costs.

However, as it has become exceedingly difficult to qualify for legal aid with the tightening of the financial thresholds, this funding option is not often available for most.

Conditional Fee Agreements

These are commonly known as “no win, no fee” arrangements. Lawyers act at risk of not being paid, as they will only recover fees for any work undertaken if your claim is successful. However, in recognition of this risk, you would agree to pay the lawyers their full fees if they win. Typically, you would pay for ‘disbursements’ (i.e. expenses incurred by the lawyers on your behalf during the case, such as experts’ fees and court fees.)

These are complex agreements with a multitude of implications subject to the outcome of the case, and a solicitor will advise you in detail on how the agreement works prior to entering into such a relationship.

Crowd-funding

It may be an option to raise money to meet your own legal costs and/or guard against the risk of having to pay your opponent’s costs through a fundraising campaign or an appeal.

This method of funding can be useful when the issues are of interest to a large section of the public, or which may draw public sympathy.  It is beneficial if there is already a group of people who are passionate about the issue; however, it is likely that a large number of people will be required to raise the money needed.

Private funding

Of course for those with sufficient funds, the option remains open to pay privately, either at the solicitor’s hourly rates (dependent on the firm’s location and the solicitor’s experience), or if the solicitor agrees to act on a fixed fee (or fees which are fixed in accordance with each stage of the proceedings).

Other options

There are other options which may be open to you when it comes to covering the other side’s legal costs, aside from having to meet the costs from your own resources:

Obtaining an insurance policy

• ‘Before the Event’ – sometimes an additional benefit which may attach to an existing policy such as home or car insurance, and may offer coverage to a specified level.
• ‘After the Event’ – this is specific litigation insurance taken out after you have become aware that you need to bring a claim. It can cover the adverse costs risk of having to pay the other side’s legal costs, and sometimes also your own costs and disbursements. However, there is a premium to be paid to the insurer which will generally have to be paid out of any damages you receive in the claim.

QOCS (Qualified One-Way Costs Shifting)

QOCS can be available in claims for personal injury with the purpose of guarding a claimant against being made to pay the Defendant’s costs if the Claimant is unsuccessful.  It is designed to address what is often a large imbalance between the financial resources of individual Claimants and NHS Defendants in personal injury claims.

Obtaining a Costs Capping Order (‘CCO’) – for Judicial Review proceedings only

CCOs aim to ensure that cases of ‘public interest’ are considered by the courts in circumstances where the judicial review could not in reality be brought without any costs protection for the claimant. Statute has provided that the proceedings will only deemed as ‘public interest’ if:

1. An issue that is the subject of the proceedings is of general public importance,
2. The public interest requires the issue to be resolved, and
3. The proceedings are likely to provide an appropriate means of resolving it.

CCOs limit your liability for the other side’s costs in the event that you are unsuccessful in the proceedings. You need the court’s permission to obtain one, and it is entirely a discretionary decision for the court when making such a determination. A CCO may only be made if permission to apply for judicial review has been granted.

When considering what constitutes ‘public interest’, the court will consider, amongst other factors, the extent to which any number of people would likely be directly affected if you were to be granted relief and how significant that effect is likely to be.

When considering whether to make a CCO, the court will consider, amongst other factors, the financial resources of the parties to the judicial review proceedings, whether your legal representatives are acting free of charge, and whether you are an appropriate person to represent the interests of the other persons/public interest generally.

If the court makes a CCO, the court must limit or remove the costs that a successful claimant can recover from the defendant. This principle is known as ‘quid pro quo’.

The Human Rights Department at Saunders Law offers expert legal assistance and representation in claims against the police, prisons and other public authorities.

For a free, no-obligation, initial discussion to see if we might be able to help, please make an enquiry online.