The following information serves as a guide to the breakdown of legal fees and the options available to you in your case...

This is a general guide written and distributed by Keith Park Solicitors and is provided for information purposes only.

Questions and Answers about Legal Costs

Question: What types of costs will there be?

Answer: In any case there are 3 types of costs:-

a) Your own solicitors charges

b) Disbursements - that is the money that has to be paid out to other organisations to run your case typical examples are:-

1) Court fees

2) Experts costs

3) Barristers fees

4) Costing fees

5) Insurance to protect you against losing

In simple cases these can be low and the majority, other than Court fees, can be postponed until the end of the case. In more complex cases, such as professional negligence these need to be paid straight away and can be about £6,000. Your solicitor will agree with you if and when and how you pay these as your case progresses. Each type of case differs.

c) Your opponents charges, if you lose

Question: Do I have to pay all or any of these?

Answer: Much depends upon what you agree with your solicitor. If your case is at the before court proceedings stage, a good solicitor will not require you to pay any of these upfront in the majority of cases.If we do want payment upfront for anything we shall tell you what it is and why you need if. YOU then decide if you want to have it or not.

Question: What are the alternatives?

Answer: Not any easy question. There are several.

Question: Can we split them up for you?

Answer: Yes.

The ways to pay your solicitors costs are varied:-

i) You can apply for legal services funding. (Most people know this as Legal Aid). There are less and less solicitors who deal with cases on this basis. Many solicitors have withdrawn from the scheme. Also several types of work are not covered by Legal Aid. FOR EXAMPLE THE LEGAL SERVICES FUNDING SCHEME DOES NOT COVER PERSONAL INJURY CLAIMS. As you probably know you have to have your means assessed to see if you qualify. Good solicitors do not offer Legal Aid. If you want Legal Aid then you should go direct to a solicitor who provides that service.

ii) Conditional Fee Agreement. This is what most people call a No Win, No Fee Agreement. The solicitor promises you that if you lose the solicitor will not charge you their own costs. But do not lose sight of the fact that there are 3 constituent parts to costs. The other 2 namely disbursements and your opponents costs will still be payable by you unless you have the advantage of an insurance policy to cover them. This is referred to later and when used with a conditional fee agreement is generally called an after the event policy.

If you win the solicitor, if he is able, will charge the other person in your litigation his usual fee plus a success fee. The success fee can be up to 100% of the solicitors' usual fee. This is the solicitors' bonus for taking on your case and promising that if you lose they will not charge you. Generally the more risky your case is the more success fee the solicitor will be allowed to charge. In some cases, for example personal injury claims arising out of a road accident or with your employer are fixed.

In all cases make sure you know what you are signing up for and make sure you know what win means. Especially if your whole case or a part of it is not just about damages. Generally a success fee is payable if you the client benefits from what the solicitor has done.

A Conditional Fee Agreement is a great idea, from your point of view. It means both you and your solicitor are "in it together".

Good solicitors, will give you 100% of your damages received with no deductions in some types of cases usually personal injury cases (apart from any fee you agree with them) provided you co-operate with them. Examples of failure to co-operate are that you fail to do something when you are asked to do it by the solicitor or you decide not to continue with your case. So there can be no doubt in your mind if you fail to co-operate and see your case through to the end then the solicitor, like anybody else who has to do work that they can not get paid for from elsewhere will charge you. If they intend to charge you they must tell you they are intending to do so and must tell you when they feel you are failing to co-operate and what the cost of your lack of co-operation is before they charge you.

iii) (a) Simple Private Client Retainer. This is where you are responsible for your own solicitors costs win or lose. Most people look for alternatives to this since they want to know if they lose they will not have to pay their own solicitor. However there are cases when the solicitor can not take the case on on a no win no fee basis,for example solicitors can not conduct a criminal case on that basis, or the solicitor may decide not to do so because he does not think you have over a certain percentage chance of winning or he may want paying costs as he goes along as he wants positive cash flow.

(b) Private Client Retainer backed by Legal Expenses Funding. You may have a policy of insurance with a company that say they will pay your legal fees for you. You may have bought such a policy knowingly from an insurance broker or some other organisation. Also, you may have it, as an add on, to your motor, household or credit card. You need to ensure that the solicitor sees all of your insurance policies when you instruct them. If you instruct a solicitor they will investigate if you have legal expenses and contact the Legal Expenses providers for you to see if they will support you.

The difficulty with legal expenses companies is that:-

1) Some cover one thing, some cover others.

2) All of them have exceptions to what they will and will not cover.

3) They do not fund your case as it goes along so you will have to arrange some form of funding.

4) They impose reporting restrictions on your solicitors.

5) They, on occasions, try and take the case away from the solicitor you chose, and sell it to solicitors on their panel.

Sometimes legal expense may be a good idea for you and your case. Sometimes it will not be. A good solicitor will guide you through what is best for you.

Question: Are there any times when having a conditional fee agreement can work against me?

Answer: Yes. Usually this is where you negotiate a settlement and there is a global amount that your opponent wants to pay you.

An example illustrates this best.

Say you have a dispute, and either at a settlement meeting or within correspondence you receive an all in offer and then settlement which is inclusive of damages and costs.

Say you are claiming £50,000, you have solicitors base costs of £10,000 there are £5000 disbursements and there are some litigation risks because your case has some problems in it and your opponents best offer is £60,000 that is for Damages and costs and you have entered in to a Conditional Fee Agreement with a 100% mark up at the start of your case, so your solicitor is entitled to 100% reward on his base costs.

If you accept the offer you get £60,000 minus £25,000(solicitors costs are £20,000 (£10,000 base costs plus £10,000 mark up) because you have won and therefore you are liable for the 100% mark up) = £35000.

Contrast that with if you had been on a private client retainer, then you would have got £60,000 minus £15000=£45,000.

The above illustration will not apply in the majority of cases. What you must do is agree the mark up with your solicitor. Ask why the success fee (mark up) is the figure it is.

Question: Well we have dealt with the options for my own solicitors' costs what about the other 2 types of costs?

Answer: Let us deal with disbursements and how you can pay for them. There are 4 options:

1) On simple quick straightforward cases a good solicitor will probably pay the disbursements themselves and wait until the end of the case. On most cases that are settled pre issue you will not be asked for anything.

2) The best, and cheapest option for you is for you to use your own money to pay for the disbursements as your case goes along. When you win, you get this money back when the solicitor recovers the costs.

3) You may be able to borrow the money to pay the disbursements.

4) You may be able to agree to give up part of your damages and then an external company will pay your disbursements for you, and if the case fails will not claim the money back from you. This service is normally only available on cases with damages of over £20,000. A good solicitor will discuss that with you.

Question: What about the insurance referred to earlier?

Answer: This is called After the Event Insurance, ATE for short; it is a great product whether you win or lose it helps you.

1) Pays for the disbursements you have incurred.

2) Pays your opponents costs and in certain cases, pays for the cost of the policy itself.

If you win you get the cost of this policy back. Either way a great deal. A good solicitor will discuss this with you. (A general rule is that the earlier you take out insurance, the better, since usually it only covers you from the date you take it out).

In simple cases, the cost of this policy may be deferred (put back), to the end of the case.

In other cases you will have to pay either the whole of the cost of a part of the ATE, up front. This will be one of your disbursements. Once you have ATE, and that ATE policy, should you lose, pays for the cost of itself then you, even if you lose are never out of pocket. (An example, you have a complex case. Your best quote for insurance is £10,000 and they want paying upfront. You pay that £10,000, the case goes to court and you have funded your disbursements of say £6000. You lose. You get back from the insurer £16,000 usually within 60 days of losing the case. If you win, the other side, when the costs are finally resolved (this can take up to 12 months (I told you it was complex!) pay you the £16,000. Of course they have previously paid you the damages).

Question: How much is this insurance?

Answer: It varies depending on the type of case, and varies depending on the risk. Any solicitor will be able to advise you if he is authorised to do so, otherwise he will put you in touch with a broker to do so. A good solicitor will deal via a broker because the broker will have access to greater facilities.

Question: Is that it?

Answer: No. You need to establish if you get paid all your damages immediately they are received or will there be deductions. Usually the solicitor will as a minimum deduct from your damages the disbursements, provided you have not funded them yourself, and even if you are to receive 100% of your damages you may receive them in 2 tranches, damages less disbursements and then disbursements later when they are recovered from your opponent. Also do not forget that if you have borrowed money to fund your case that will be paid back immediately on settlement and you will not be able to recover that cost from your opponent. Also if your ATE cost (premium) was deferred that will be required to be paid from your damages.

Question: Anything else I should know about costs?

Answer: Solicitors costs are complex. Anything else you want to know you should ask a solicitor to explain it to you.