Running a legal case can be expensive, and a range of costs will be incurred, such as solicitor and barrister fees, court fees and expert witness fees.

One way of managing the costs of your litigation claim is to select the right billing model for solicitor fees. There are a number of billing options available for solicitors, including hourly rates, fixed fees, or a combination of both. Solicitors may also offer a “no-win, no-fee” service, where the client will not have to pay the solicitor if the case is lost. This could be in the form of a conditional fee agreement or a damages based agreement.

More information on these options follows, but there are alternative ways to get litigation funding that you might want to explore.

Solicitors have a duty to discuss all funding options with you and you may have a case for professional negligence if you have not been properly advised by your solicitor about the retainer and funding options available.

Choosing the right billing model

Determining the litigation funding model that is right for you or your business depends on the details of your case, as well as your own financial position and attitude to risk. As a start, ask yourself the following questions:

• How long will my case take to resolve? – Fees based on hourly rates can spiral out of control if a case drags out over a long period of time. Fixed fee legal services mean what you pay is agreed in advance, but you may risk paying far more than you initially intended.
• How certain am I that I’ll win? – Because the loser typically pays both parties’ legal fees, the more uncertain a case is, the more risk you’ll be liable to pay legal fees for both sides if you lose.
• How much am I likely to receive in damages? – If it’s a lot and you’ve chosen a contingency fee deal you may be frustrated to give away a large percentage of your damages.

 

Types of solicitors’ fees plans available

Hourly rates billing

Solicitors will charge clients for the time they spend working on a case. This is a very common model is used across most disputes.

Pros: If you win your case, you keep 100% of the damages and in theory you should incur no legal fees, although typically the winner only recovers in the region of 70% of their legal fees. If a case settles quickly legal fees should be relatively low.

Cons: The solicitor is paid for their work on the case regardless of the outcome – they are not taking any risk at all and have no financial incentive to find a quick resolution for you. You are taking the risk for your own legal fees and for your opponent’s, with no certainty over what either of those bills could end up looking like at the end of the case.

Fixed fee legal services

Fixed fees are pre-agreed for each element of the case, irrespective of the eventual actual cost. It may be possible to agree a fixed fee for an entire dispute, but this is extremely rare. In such an instance a Discounted Conditional Fee Agreement (D.CFA) should be considered to maximise the recovery of your legal fees from the losing party.

Pros: No matter how long the case lasts you only pay the agreed amount for your own legal services. If successful you should retain all the damages, although if you’re unsuccessful you’re still liable for your opponent’s costs.

Cons: If the case is over quickly, you still have to pay the agreed amount, which is one of the reasons that fixed fees for phases is more common than for a whole case.

A combination of hourly rates and fixed fees

Solicitors may charge a combination of hourly rates and fixed fees for a case. For example, a solicitor may charge a fixed fee for initial consultation and an hourly rate for any additional work.

No win, no fee agreements

No win, no fee is a type of billing model used by solicitors in the UK, where the client will not have to pay the solicitor if the case is lost. This type of billing model is also known as a “conditional fee agreement” or CFA. Damages based agreements are also a type of no win, no fee agreement.Under a CFA the solicitor will typically charge the client a success fee if the case is won. This success fee is calculated by reference to hours works, agreed upon in advance and is capped by the law. With a DBA the client pays over a percentage share of the damages recovered to the legal team, so the fees are referenced to the amount recovered rather than the amount of time spent on the claim.

No win, no fee agreements will often require parties to take out an “after the event” (ATE) insurance policy, which will cover the client against any costs incurred by the other side in case the case is lost.

Third party funding (TPF)

Third-party funding refers to a process whereby a third party, such as a specialist funding company, provides financial support to a party involved in a legal case in exchange for a share of any damages or settlement awarded. This type of funding is also known as litigation funding or litigation finance.

Third-party funding can be used in a variety of legal cases, including commercial disputes. The funding can be used to cover the cost of legal fees, expenses, and disbursements, allowing the funded party to pursue their case, even if they lack the financial resources to do so.

How can Annecto Legal Assist?

Annecto Legal helps businesses realise the value of their commercial litigation claims.

Many businesses are missing opportunities to remedy disputes because they feel the pursuit of justice is too expensive. Annecto Legal was established to help businesses pursue claims and remove any perceived cost barrier to litigation.

To help you decide the right option for you, get in touch with an expert member of our team today using the form below.