Funding Options For Your Legal Case

• Published date: 12 July 2022
• Subject Matter: Insurance, Insurance Laws and Products
• Law Firm: Giambrone & Partners
• Author: Mr Khizar Arif

Ostensibly, the rule of law exists to provide a semblance of justice to society. Frequently the decision to bring or defend a claim, is governed by cost rather than justice.

Khizar Arif, a partner, pointed out "There is no avoiding the fact that litigation is expensive. From court fees to expert's fees to counsel and solicitor's costs, the amount of money a legal claim demands can be surprising, especially to an individual who rarely, if ever, has been in the position of considering legal action. Costs can range from up to '5,000 for small cases to considerably more money for large cases. Additionally, in England & Wales, if you lose in court you may have to pay the legal costs of your opponent as well as your own legal costs.

Private funding

In most cases, the client has to fund the claim personally, either in a lump sum or payment in instalments as agreed with the lawyer, often, if this cost is too much for clients to bear, lawyers will come up with creative solutions to enable their clients to fund their claim.

Conditional Fee Agreement ("CFA")

A conditional fee arrangement, as the name implies, is an arrangement between a lawyer and their client, where the lawyer only charges the client legal fees if the claim is successful. More commonly known as "no win, no fee", this arrangement allows clients to more easily bring court proceedings and reduce the risk they must bear during said proceedings.

Damages Based Agreements ("DBA")

Similar to a CFA, a DBA only applies if the client wins his case. As a result, many people confuse the two together. Where the two differ is that the amount paid to the lawyer in a CFA is determinant on the lawyer's fees, either in time costs or as an agreed flat fee, and in a DBA the client in the event of a win, will pay the lawyer a pre-determined percentage of the damages awarded by the court or settlement sum received.

Third-party funding

In the UK, third-party funding is available to clients who cannot fund the entirety of their case alone. Third-party funding refers to the practice of parties outside of the litigation, i.e. third parties that agree to fund all or part of the litigation for a portion of the damages. Third-party funding can be thought of as a DBA but with third-party investors instead of the lawyer bearing the risk. Third-party funders must not have an existing interest in the case and cannot exert any control over the process of the litigation. The benefit of third-party funders is the reduction of the...