Disputes are an unfortunate part of commercial life.  When these disputes turn into legal proceedings this can be stressful, disruptive and damaging to your business.

In addition to those difficulties is the natural concern as to what level of legal costs will be incurred in the process.  A successful party to litigation can expect to recover a proportion of their fees from their opponent.  However, traditionally, an unsuccessful party is left to pay not only all their own legal costs but also those of the other side.

Fortunately, Hugh-Jones LLP are able to offer innovate ways to help clients reduce and control their financial exposure when embarking on litigation.

For many types of case we are able to act for clients on the basis of a Conditional Fee Agreement (CFA).

CFAs take a number of different forms.

A Conditional Fee Agreement is an agreement whereby a solicitor and a client can agree to share the risk of litigation so that part, or in some cases, all of the solicitors fees are only payable if a “win” is achieved.

In the event a win is achieved as defined by the CFA agreement, a success fee may be payable by the client in addition to the normal fees.

If a win is not achieved, i.e. the case is lost or the outcome does not meet the definition of a “win” in the CFA, a client will only pay the reduced legal fees or no fees depending on the terms of the CFA.

In most cases involving commercial disputes all disbursements (including court fees, counsel’s fees and expert’s fees) and expenses, are payable by the client in any event.

In certain cases we may be able to offer you a straight “no win, no fee” agreement.  In this situation, if your claim is unsuccessful, you will not be liable for any of the fees we have incurred in acting for you (although you may be required to pay certain expenses, such as court fees, that we pay on your behalf).  In return for us accepting 100% of the risks of the case being unsuccessful, we would charge you a success fee (calculated as a percentage of our normal fees) if the case does succeed.  The success fee is payable out of your damages and cannot be recovered from the other side.  The success fee itself can be capped as a percentage of the damages you recover.  This means that the balance of any damages you recover are ring-fenced.

In other cases, it may be more suitable for the risks of the litigation to be shared between you and our firm.  In this situation, we might offer to act on the basis of a discounted CFA.  This might mean, for example, that we would only charge you 50% of our normal hourly rate if the claim is unsuccessful.  The full hourly rate would only become payable in the event of a successful outcome, when your opponent will normally be ordered to pay your reasonable fees.  Again, you would be liable to pay a success fee out of your damages but the level of the success fee would be set at a lower rate, compared to where we act under a “no win, no fee” agreement, because we would have accepted a reduced share of the risk.  This type of arrangement can be very attractive to clients.  By sharing the risk with Hugh-Jones LLP, the client reduces the level of fees they will have to pay if the case is unsuccessful but may keep a larger proportion of damages if the claim succeeds.

In routine, lower value litigation, we are often able to offer to act on the basis of a discounted fixed fee CFA.  Here, we would agree a fixed fee with you (sometimes staged based on the point at which the case concludes) that will be payable if the case is unsuccessful.  The fixed fee is set at a level much lower than we would charge based on our normal hourly rates.  If the claim succeeds, our fees are calculated on the basis of our normal hourly rates, at which point these fees can be claimed from your opponent.  This is another type of risk sharing agreement and a success fee would be payable in addition.  The level of the success fee would reflect the level of discount we had offered in our fixed fee.

Hugh-Jones LLP have arrangements with experienced barristers who are also able to act on the basis of CFAs.  This means that, where it is necessary to instruct a barrister, our clients have the comfort of knowing that the costs can be limited in the event the case is unsuccessful.  This also provides the comfort of knowing that the barrister, along with Hugh-Jones LLP, have a direct financial interest in ensuring that your claims succeeds.

Clients embarking on litigation are concerned not only with the level of legal fees of their own lawyers but may also be anxious about the unknown legal fees of their opponent.  Fortunately, it is possible to insure against this risk.  After the Event (ATE) insurance policies can be taken out to protect you against the legal fees of the other party if you lose the case and a costs order is made against you. These policies are usually priced as a percentage of the level of insurance cover required.  The actual pricing will vary greatly depending on the nature and risk of the claim but Hugh-Jones LLP are experienced in helping clients obtain the most suitable and costs effective policy.

The above examples set out some of the methods by which Hugh-Jones LLP are able to assist our clients in reducing the financial risks of litigation.  The most suitable method of funding your case will depend on the nature of the claim, the strengths of the case and your attitude to risk sharing.  We will help you to make the best choice and ensure the litigation process is as affordable and stress-free as possible.

PLEASE NOTE, THIS ARTICLE IS CONCERNED WITH THE FUNDING OF CIVIL AND COMMERCIAL LITIGATION CASES BUT NOT WITH PERSONAL INJURY CLAIMS.