17 August 2012 by Yezdan Izzet

To fund, or not to fund, in commercial litigation…

Embarking on any litigation carries risk and can be a long and costly process for the parties and more often than not, it is not always clear at the outset whether or not there are high prospects in succeeding on a claim.

There is sometimes the added risk of a counterclaim and just because you have good chances in succeeding on your claim does not necessarily mean that your opponent’s counterclaim is without any merit.

When you initially approach a solicitor in relation to a potential claim not only will the solicitor seek to advise you on the merits of proceeding with the claim but will also discuss with you the likely costs in proceeding with the claim and your funding options which may include:

  1. Private funding – this essentially just means that you fund your own costs. If you proceed to a hearing and succeed we will seek to recover your legal costs from your opponent. However, you can generally expect to recover only 65-75% of your costs.
  2. Fixed fees – agreeing a fixed fee for each stage of the proceedings. This is an attractive proposal as it allows you more certainty and better budgeting when you know exactly what further costs will be due at each stage of the proceedings.
  3. Legal expenses insurance – it is wise to check any pre-existing insurance policies e.g. home and contents insurance, general corporate insurance policy, buildings’ insurance and even car insurance to see if there is any legal expenses cover attached to the policy.
  4. After the Event insurance – this is an insurance policy which we can arrange for you through independent insurance companies and will cover you in the event that you “lose” in the proceedings and are ordered to pay your opponent’s legal costs. There is a premium for the policy and insurance providers will not normally provide the insurance unless you can show that you have more than a 60% chance in succeeding on your claim and on any counterclaim (this is where pre-action disclosure may come in handy, see below). If you succeed in the proceedings the premium for the policy can be recovered from the opponent, although the amount of it may be disputed.
  5. Conditional Fee Agreement – more commonly known as a “no win, no fee agreement”. If you have a good chance of success on your claim we may be able to offer a Conditional Fee Agreement. The terms of the Conditional Fee Agreement will be agreed at the outset but we usually agree not to charge any legal fees to you if you proceed to a trial and lose. However, you would remain liable for your opponent’s costs. As such, this is usually coupled with After the Event Insurance. If you “win” then our costs become payable together with an “uplift” and we would seek to recover our costs and the uplift from the losing party.

There are other funding options which are not as common and which we can discuss with you if relevant to your claim including contingency fees (effectively “taking a cut” of your damages if you proceed to a trial and win – most likely to be offered on higher value cases with good merits).

Funding is going to get a lot more complicated when the changes to funding bought about by the Jackson Reforms are implemented (likely to be in April 2013) pursuant to the Legal Aid, Sentencing and Punishment of Offenders Act 2002. Some of the changes that will happen include:

  1. After the Event Insurance – the insurance premium will be payable by the insured party and not the opponent.
  2. Conditional Fee Agreements – the “success fee” or “uplift” will become payable by you rather than the opponent although this will not be retrospective.
  3. Contingency fees as we now call them will be “Damages Based Agreements”. Legal fees are only payable if you “win” and will be calculated as a percentage of the damages recovered.

Before proceeding with any litigation it is wise to consider whether litigation can be avoided. After all, litigation ought to be a last resort action. In some cases, a letter before action may be sufficient to bring your opponent to a position where negotiation is possible. We will also consider alternative dispute resolution such as mediation and any pre-action claims which may assist the parties in assessing their respective claims and bring them to a negotiating position. See our previous blog on relating to disclosure and pre-action disclosure:
“ Lay your cards on the table………”

3 August 2012 by

Landlords, call your solicitor

A few recent cases before the Courts have emphasised the need for landlords to take care in their dealings with their tenants and indeed to monitor their agent’s dealings with their tenants.

10 August 2012 by

EU rules to ease cross border successions, Brussels IV

There are a growing number of people in the UK with assets abroad and whether it’s a holiday cottage in France or a villa in Greece the logistics of cross border tax planning can be tricky; similarly dealing with the foreign assets on death can be equally problematic for the Personal Representatives of the estate.

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