In litigation, a crucial factor when deciding whether to bring a claim is determining the legal costs involved. Any party that is looking to resolve a commercial dispute must have sufficient resources to fund their case. A party to a dispute may be liable for any legal fees and could also be liable for any disbursements that they incur during the legal process, such as court fees or expert fees. Unless an alternative method of litigation funding or insurance is put in place, parties may also be liable to pay their opponent’s fees, should they lose in court.

A no win no fee agreement can be put in place by a legal team to assist with funding some of the litigation costs. The purpose of a no win no fee agreement is to have a separate funding arrangement in place so that instead of paying a solicitor’s legal fees whilst in litigation, these are deferred until a later date if the claim is successful. These agreements do not have to include counsel’s fees or other disbursements but Annecto Legal can assist clients with funding for no win no fee agreements and help to remove financial uncertainties.

Types of no win no fee agreements

There are different types of no win no fee arrangements that can be used in litigation. These include Damages-Based Agreements and Conditional Fee Agreements. 

Damages-Based Agreement (DBAs) – DBAs are a type of arrangement made between a client and a solicitor in which the solicitor agrees to fund their case and share the risk of litigation. In return, the solicitor will be paid a percentage sum of the damages recovered as long as the client’s case is successful. DBAs provide that, instead of being paid on a conventional hourly rate, the solicitor’s legal fees are only payable in the event that the case is successful.

Therefore, these types of agreements allow clients the opportunity to pursue a case without the stress regarding the solicitors’ fees that are associated with it. In some circumstances, however, disbursements and fees for Counsel may still be payable by the client. Damages based agreements can be flexible on a case by case basis, and can be supported by disbursement funding where necessary. 

Conditional fee agreements (CFAs) – CFAs are another type of legal funding arrangement in which a client must only pay for legal work following a successful case. Depending on the type of case, some legal expenses and costs can be recovered from the losing party at the end of the claim. Although, changes to Conditional Fee Agreements in April 2013 mean that the ‘success fee’ associated with CFAs can no longer be recovered.

Conditional fee agreements are put in place to allow solicitors to charge their client as success fee, but only on the condition that they win their case. This type of agreement assists clients by allowing them to pursue a claim to its full extent without having to pay litigation fees if the claim is unsuccessful.   

All success fees and costs will be outlined and discussed prior to the agreement and instruction of solicitors. Annecto Legal can help you to determine which type of no win no fee agreement and funding options would be best suited for your case.

No win no fee funding

There are litigation funding methods that can be used for cases on a no win no fee basis. Litigation funding methods can help clients to mitigate the financial risks of litigation. 

After the Event Insurance (ATE insurance) – An ATE insurance premium can be thought of as a ‘swap’. For either no upfront cost or a small upfront fee, the insurer takes on all of the risk of the potential adverse cost award. Therefore, the client has swapped their obligation to pay the defendants in the event of a loss with the obligation to pay the insurer in the event of a win.

This can be an attractive swap as the client is likely to be in a better financial position following a win than following a loss. Also, the payment to the insurer will only be a percentage of the adverse costs rather than the entire amount.

The actual amount the client will be expected to pay for this legal expenses insurance will depend on the length of time it takes to settle the case. 

Third Party Funding (TPF) – TPF is an arrangement in which someone with no prior connection to the dispute agrees to finance all or a part of the legal costs in return for a fee payable from the proceeds to be recovered. TPF can also be used in conjunction with other available funding options, such as conditional fee agreements and damages-based agreements.

Third party litigation providers take on the risk of your litigation finance, freeing up your cash flow and shifting the risk off your balance sheet. In return for mitigating the risk, the funder will typically seek in the region of a fifth to a third of any damages recovered. This means that the client will keep up to 80% of the reward, whilst taking none of the risk.

In many cases, third party funders will require a lawyer to give an independent assessment of a case and its prospects of success before they agree to provide funding. If your case is unsuccessful and you lose your case, you will not be required to pay.

Annecto Legal can discuss the various types of litigation funding methods available to you and help determine which method is best for your case. 

How can Annecto Legal assist?

Annecto Legal helps clients realise the true value of their litigation claims. Our partners are lawyers that are frustrated with the traditional hourly rate funding model and offer no win no fee agreements to suitable clients.

Get in contact with an expert member of our team to determine which litigation cover is the right litigation funding choice for your no win no fee arrangement.

Call us today 0800 612 6587, or contact us using the form below.