Paying For Your Legal Case
Many people and businesses worry about the costs of instructing lawyers. However, it is very much a case of you get what you pay for. An experienced lawyer can secure the outcome you want and frequently save you far more than the cost of their fees.
For example, in a recent Wills case for a client who approached us the solicitor that advised the family managed to vary the Will to reflect the wishes of the remaining family members and at the same time reduce the Inheritance Tax liability they faced to zero. The solicitor’s bill came to £10,000, but her advice meant the beneficiaries received their share of the estate immediately (rather than having to wait) and tax-free, saving them £180,000 in tax.
In family and divorce law cases obtaining a good settlement will be only one factor. Reaching a good workable agreement regarding your children will be even more important.
Solicitors usually charge on an hourly basis, so you should always ask what their hourly charges are, and do not be afraid to shop around. There may be an opportunity to negotiate a fixed price with your solicitor for some types of work and you should discuss this with them.
In any event all solicitors must set out in writing to you details of their hourly charges including VAT and disbursements (payment to others) together with an estimated length of time it will take to deal with your case and estimated final costs. If this information is not provided to you in writing at an early stage you should ask for it.
Remember, you are paying for expertise and this can be costly but there are a number of different ways to fund your case.
Many clients, (both individuals and businesses) pay for their cases with their own money. Your lawyer will provide you with a detailed estimate of the likely costs before starting work. Clients are also advised before any significant extra costs may have to be incurred. This includes matters such as a solicitor instructing a barrister in order to obtain specialist legal advice or for the barrister to represent the client in court. You will be expected to pay an initial sum of money "on account" of costs and will be asked for further sums as your case progresses. You should ask to be kept informed if the original estimated costs changes due to complexity or the length of your case or for any other reason.
Fixed Fees & Flexible Fees
In straightforward legal matters a lawyer may provide the service for an agreed fixed-fee. The fixed fee or so-called menu pricing may be for a complete legal matter, for example conveyancing, or for a simple part of a more complex matter, for example drafting and filing divorce papers. In cases where there is another party who is your opponent the costs are less likely to be fixed. So in the case of a divorce a lawyer may charge a fixed fee for completing and filing divorce papers, but they would probably charge for negotiating with the opposing party on matters such as finances and children issues on an hourly basis.
Law firms may also offer flexible fees for business clients, particularly established clients.
No Win No Fee
Some firms may also offer so called “no win no fee” also known as a conditional fee agreements. A conditional fee agreement usual means a firm will not charge you if you lose your case, but will charge you slightly higher fees if you win.
The increased fees are known as the "success fee" and will be an increase on their normal hourly charging rates, but cannot be more that 25% above their normal hourly charging rate for most cases and 100% for cases going to appeal, though your opponent would have to pay the majority of your legal fees.
If you win these are restricted to what are regarded by the court as "reasonable costs", and so you may still be liable to your solicitor for the balance, so you should always check the position with them as some conditional fee agreements will waive unrecovered solicitors’ costs.
If you lose your case you will be liable for your opponent's costs, however it is possible to take out insurance known as "After the Event Insurance (ATE)" to protect you against paying those costs (see below).
Whilst this type of funding is often called "no win no fee" this is a misleading statement as you may still be liable for payment of disbursements (payment to others, such as court fees and barristers’ fees) as well as paying the premium for After the Event Insurance.
However, some solicitors’ firms will enter into a loan agreement with you to cover the cost of ATE premiums and entering into an ATE insurance means the insurer will pick up the cost of disbursements as well as the opponent’s costs if you lose.
Conditional fee agreements are only available for civil and employment cases. They are not available for criminal and family cases.
After The Event Insurance
This type of special insurance is frequently combined with a conditional fee agreement. This insurance policy pays out should you lose your case and have to pay your opponent’s legal costs. After the event insurance tends to be used for expensive, high-value legal cases, where there is a lot at stake. The cost of premiums will vary depending on the complexity and type of case. You will need to enter into a written agreement with your solicitor for this.
Damage Based Agreements
These are similar to conditional fee agreements, but instead of the lawyer charging a success fee based on an increase in their hourly charging rates by 25%, they can instead take up to 25% of the compensation that you successfully recover at the end of your case. These types of agreements are also backed by After the Event Insurance and will require you to enter into a written agreement with your solicitor.
Legal Expenses Insurance
Many household and motor insurance policies include cover for legal costs. You should check the wording of any policy you hold to check what is covered.
Trade Union Funding
If you are a member of a trade union you may find that your membership includes legal expenses. Membership usually covers employment disputes, but can also cover family disputes and some civil cases such as accidents at work. You should therefore check with your union representative whether you are entitled to legal expenses cover.
Due to changes in Legal Aid the sort of cases covered by Legal Aid has been greatly reduced. Legal aid is available for criminal cases, but entitlement will be based on your income. Legal Aid is no longer available for most types of civil and family cases, but there are exceptions, such as domestic violence cases and medical negligence involving children at birth. Please check with your solicitor whether legal aid would cover your type of case.