1. LITIGATION FUNDING
Our preferred and normal method of acting on behalf of clients in contentious matters is to be paid for the work that we do at an hourly rate or, on occasions, for a fixed fee if we can predict with reasonable certainty the work that has to be done. For more information regarding this we refer to section 2 below. However, when considering litigation, we draw your attention to the following matters which may affect your decision as to how to finance the case.
A. BEFORE THE EVENT INSURANCE
We strongly recommend that you check any insurance policy that you may have to ascertain whether it provides legal expenses insurance. This is commonly an "add on" to buildings, content and/or motor insurance policies. If such cover is provided and you wish to take it up you should contact the insurance company to notify it of the fact that you require cover. It may exert pressure to persuade you to instruct a firm of solicitors chosen by it and frequently that firm will be not be situated within a convenient distance to enable you to meet the person acting for you. If the insurers indicate that they do require you to instruct their solicitors but you would like us to act please let us know and we will take this up with them. The policy will set out the extent of the cover provided and the general conditions applicable such as, for example, the insurer’s right to cease providing costs cover if your case does not have a reasonable prospect of success. Such policies only provide cover for your costs – unless they stated otherwise they do not provide cover for costs that you may be ordered to pay another party.
B. AFTER THE EVENT INSURANCE
This is insurance cover that can be arranged when you wish to take or are taking proceedings but are concerned that you may have to pay the costs of the defendant in the event that the claim is unsuccessful. The ATE insurer is provided by us with all the relevant papers and it will then decide whether it is prepared to offer insurance cover and, if so, on what terms. Obviously the premium will be based on the strength of your case so that if your claim does not have a good prospect of success insurance will either not be available or only at a substantial premium. Prior to 1 April 2013 a successful litigant could normally obtain reimbursement of the premium from the unsuccessful party but that is no longer the case (excepting clinical negligence claims) so that you will be responsible for payment of the premium.
C. CONDITIONAL FEE AGREEMENTS (CFA)
These agreements are commonly known as "no-win no fee" agreements and generally provide that if your claim is unsuccessful you will not have to pay our costs, VAT and, in some cases, disbursements. In return for our acceptance of the risk that we will not be paid if the claim fails, we charge a percentage mark-up on the costs that we would charge if acting on a privately paid basis. This will vary according to the nature of the case and, most obviously, depending on the prospects of a successful outcome. If your claim is strong the mark-up will normally be less than if your case has, say, only a 60% chance of success. The mark-up can be reduced if you agree to pay a proportion of the costs that we would normally charge if acting on a privately paid basis. Each case is different and if you are interested in a CFA you should inform us and we will let you know if we are prepared to act on that basis and, if so, on what terms. We will also provide you with a Law Society information sheet regarding conditional fee agreements.
Prior to 1 April 2013 the percentage mark-up could normally be recovered from the unsuccessful party. However the Government has changed the regulations with effect from that date and if your claim succeeds the mark-up will now be payable by you. If, for example, we have been acting on the basis that we are entitled to a 50% mark-up and the unsuccessful party is ordered to pay £5000 in respect of your costs we will be entitled to charge you £2500.
Only under very exceptional circumstances will we be prepared to act for a client on a CFA when he/she is a defendant. The only occasion on which we may act is when the client has a substantial counterclaim and a very good prospect of successfully defending the claim.
D. DAMAGES BASED AGREEMENTS
These have been introduced by the Damages- Based Agreements Regulations 2013 and at the time of preparing this note we have not acted under any such agreement. The Law Society considers that there are many unsatisfactory provisions in the Regulations, a view that we share, and, at present, we are not prepared to act on this basis.
2. LITIGATION COSTS
This section of the note is to give you information regarding costs in contentious civil cases, including matrimonial work. It is intended to supplement the information provided in our terms of business and/or our client care letter It applies only to work done on your behalf outside the scope of the public funding (formerly legal aid) scheme. As a result of the Government’s decision to remove public funding from most areas of civil and matrimonial work, we are no longer able to undertake publicly funded work except for criminal and child abduction cases. If we consider you are entitled to apply for public funding a separate information sheet will be given to you.
Although you may during the course of, or at the end of, the litigation obtain an order for costs against your opponent, you are our client and, therefore, responsible for the payment of any costs properly incurred by us while acting on your behalf. It is normally impossible to give accurate estimates in advance of the cost of litigation because this depends on what you require us to do and the work that has to be done in response to the actions of the other party, neither of which can be predicted with certainty.
On occasions it is possible for us to quote a fixed price for a particular task, in particular in non-contentious matters when the work to be done is relatively easy to predict. In litigation our charges will primarily be based on the time spent. Unless you are notified to the contrary this will be charged at our current hourly rates. At present these rates are £350 for partners and consultants, £210 for assistant solicitors, £150 for a paralegal, £175 for a trainee solicitor and £60 for a legal administrator. Our charging rates are reviewed annually. We charge for routine letters and emails received. Routine letters and emails out and telephone calls are charged at one tenth of the hourly rate. Long letters and telephone calls are charged on a time basis. For complex matters there may be a percentage up-lift on our fees or the hourly rate may be higher and we will advise you in advance if that will be the case.
In addition you will have to pay VAT on our fees at the appropriate rate which is currently 20% and there may be disbursements such as fees of the court, enquiry agents and a barrister, some or all of which may also be subject to VAT. If disbursements are likely to be substantial or unusual we will normally refer to you before incurring them.
We generally request a payment on account of our costs and disbursements and will submit interim accounts during the course of the case. If at any time you wish to know what costs have been incurred this information is available on our time recording system. You may impose a limit on the costs to be incurred so that we will refer back to you before proceeding further. Until a bill has been submitted by us all payments on account are retained on our client account and are used only for payment of disbursements. In the event that you fail to make payments on account or pay interim invoices we may decline to act further on your behalf.
If your case in non–matrimonial civil proceedings is successful you will generally obtain an order for costs against the other party, unless the other party is legally aided or it is a small claim, but an order for costs is worthless if the other party is unable to pay. You must always consider not only the strength of the case but also the financial position of your opponent. If costs are awarded to you and the other party is able to pay, the costs will be awarded by the court on a standard basis, whereas we are entitled to charge you on an indemnity basis. In practice we find that the paying party will normally have to pay between 70% and 90% of the costs that you have to pay us. Whether you are able to obtain an order which effectively gives full reimbursement depends on the extent to which the court considers it is reasonable to expect the other party to reimburse you for the costs that you have incurred with us. For example, if you telephone us twice a day for three months it is most unlikely the court will consider that the paying party should reimburse you for our costs in dealing with your calls. If an award of costs is made in your favour we generally try to agree costs with the solicitors for the other party as this can save substantial delay and expense. If the costs cannot be agreed they are assessed by a cost officer or district judge and we will explain the procedure at the appropriate time.
Litigation is expensive and the outcome frequently uncertain so the possibility of a settlement must be kept in mind. Under Part 36 of the Civil Procedure Rules there is a procedure for both claimants and defendants to make settlement offers, both before and after the issue of court proceedings, and it is almost always advisable to make such offer which, if not accepted by the other party, can provide substantial benefits in the event that the court awards damages in excess of the amount for which you offered to settle.
In matrimonial proceedings the respondent to a divorce petition will normally be ordered to pay at least some of the costs of the petitioner although frequently there is an agreement that each party will pay his/her own costs as part of an agreement that a petition will not be defended. If a party makes an application for a financial remedy (formerly known as an application for ancillary relief) the normal rule is that each party will pay his/her own costs. The exception to this is that a party who has been guilty of "litigation conduct", for example dishonest or deceitful behaviour in the litigation, may be ordered to pay part or all of the costs of the other party. An order for costs is very unlikely to be made if, for example, one party has been awarded more than the amount for which he/she offered to settle. In matrimonial financial proceedings each party is expected to make an open settlement proposal. The court may also make an order for costs in applications under schedule 1 of the Children Act 1989. It is unusual for orders for costs to be made in other applications under the Children Act 1989, for example for residence and/or contact.
If the case relates to matrimonial or family matters you should also take into account the bitterness and unhappiness which is often as damaging as the cost of resolving your disputes through the court. Mediation or other methods of alternative dispute resolution should be seriously considered and we can provide you with further information regarding these options. Finally, you must remember that your case may not be successful and you may have a substantial liability for the costs of the other party as well as for your own costs. This is not the case in some personal injury claims when the principle of “one way costs shifting” applies.
If this note has put you off litigation it may have served a useful purpose but if it has merely put you off this firm we suggest you ask other firms for similar information before instructing them. DO REMEMBER THAT IF AN OPPONENT IS UNABLE TO PAY, LITIGATION IS USUALLY POINTLESS UNLESS A POINT OF PRINCIPLE IS AT STAKE.
If you are dissatisfied with our charges you may, depending on the circumstances, apply either to a court for assessment of our costs or ask us to obtain a remuneration certificate from the Law Society. If you have any complaint regarding our costs or the manner in which your case is being handled, you should ask for the complaint to be referred to one of the partners or, if a partner is handling the matter, another partner.
3. REFERRAL FEES
With effect from 1 April 2013 the Government has banned payment of referral fees in personal injury cases. We do not and never have paid fees for the referral of contentious and non-contentious work as it may create a conflict between our duty to our clients and to those persons or organisations referring work. In cases in which we do not have sufficient expertise to act we will endeavour to refer you to a firm of solicitors who can properly represent you and we do not receive payment for any such referral. In our opinion the ban on referral fees should be extended to all legal work.
We hope that this note is of assistance and if you require further information or need a clarification of any matter please contact Jatinder Sandhu on 020 7700 0265 or jatinder@percyshort.co.uk.
(updated 12.05.23)
