What is legal funding?

Legal funding, or litigation funding, is the method in which legal fees are paid by a client.  Legal funding often refers to the agreement with your solicitor that his/her costs are only paid upon success, or alternatively it refers to financial products where an investor will pay your legal costs.

One of the biggest reformation in recent years has been to commercialise the funding of the legal system in England & Wales.

Historically, access to justice (in respect of commercial or non-family civil claims) was restricted to your ability to pay or a complicated application for Legal Aid, where the state funded your legal advice and assistance.  

This worked quite well but was costly to the taxpayer and whilst the principle was sound, the Legal Aid system was vulnerable to abuse.

From the 1990s, a resolution to this was to permit “no win no fee” agreements, referred to as Conditional Fee Agreements (“CFAs”) which provided a contractual arrangement with a client and a solicitor such that the solicitor would receive a premium on his/her fees if the client’s case was successful (as “success” normally meant that the other side paid such costs) but if the case was not successful then the solicitor would charge no fees.

More recently the law has been altered to prohibit the recovery of some of the legal fees due under CFAs.  The premiums due under such arrangements are no longer recoverable following the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”) which, amongst many other legal changes, prohibited the recovery of any premiums as a legal cost payable to solicitors under a CFA.

Instead, Parliament has encouraged alternative forms of legal funding, most commonly where the solicitor (potentially together with a Third party litigation funder) bears the risk and interest in the sums claimed.  This is a principle that has existed for many years in other legal jurisdictions, for example the USA, and is commonly referred to as a Contingency Agreement, although in the UK it is referred to as a Damages-Based Agreement (“DBA”).

There are a number of arrangements that a client can enter into with his/her solicitor to achieve certainty in relation to their individual needs.  Please visit our webpages which deal with the following alternatives:

At Francis Wilks & Jones we are extremely familiar with all types of funding models and are also receptive to any alternative proposals. We have access to a wide range of litigation funders who may be able to assist you and have a comprehensive experience of alternative litigation funding models, appropriate to your needs.

Please call any member of our commercial litigation team for your consultation now on 020 7841 0390.  Alternatively e mail us with your enquiry and we will call you back at a time convenient to you.

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