Litigation has a reputation for being costly and legal fees and costs are the main reason not to use the services of the legal profession. There are, however, several ways in which fees and costs can be funded, as well as free sources of legal help and advice.
There are many types of legal services around, from drafting contracts to dispute resolution. Conveyancing, wills and divorce are the areas most of us are familiar with, however, there are many types of legal services available, from simple advice, i.e. what to do in a given situation to full representation, which is when a solicitor acts on your behalf.
Examples of legal services
Legal advice: explaining how to deal with a certain situation, what to do and what to expect. The advice in itself is usually only the first step in the process and further action such as drafting documents or contacting third parties will be required.
Drafting documents: this is the bread and butter of most legal professionals. From letters to highly complex contracts and everything in between, legal professionals spend a great deal of their time drafting documents. Examples are wills, employment contracts, terms and conditions for businesses, statements of case for claimants, defences, service contracts, tenancy agreements and consent orders. Drafting documents can be a standalone service (such as writing a will) or a part of a much longer process (such as drafting the particulars of a claim).
Acting on behalf of their clients: lawyers are often hired to perform certain actions on behalf of their clients. An example is the conveyancing process where the solicitor handles all the required paperwork for the transfer of a property, requests and provides information to the other party (buyer or vendor).
Legal representation: this is when the lawyer represents a client in a certain action and the lawyer takes over the case with the client acting in accordance to the instructions provided by their lawyer. An example is someone accused of a criminal offence who is being represented by a solicitor or a business owner being represented in an employment case brought by a former employee.
Contentious vs non-contentious work
Although the range of services provided by the legal profession is very wide, their type of activities can be narrowed down into two categories depending on whether there is a dispute to be resolved.
Contentious. Contentious work relates to dispute resolution, also known as litigation, where matters that are not resolved end up being argued in court (or a specialist tribunal in certain cases such as benefits or employment). Contentious work is not just court appearances but everything that relates to bringing or defending a claim. Most of the work is actually done away from the courtroom and most cases never make it to court because they are settled or discontinued. See court process for more information about the court process.
Non-contentious. Does not involve dispute resolution, although it can help prevent future disputes or make them easier to settle when they do occur. Most of the work done by the legal profession is non-contentious, that is, not related to any legal action being taken. Examples are drafting contracts, leases, tenancy agreements, wills and conveyancing.
Like many other services, legal services can be offered either on a fixed quote or an hourly rate basis. Fixed quotes are used for work of a standard nature
A lot of the work done by law firms is charged on an hourly basis (or fractions of an hour) according to a hierarchical structure where the more senior people (for example partners) charge the highest rates and more junior personnel charge lower rates for their services. A typical solicitor’s rate is around £200 an hour while a paralegal’s would be around half that amount. The rates charged may vary in different parts of the country, Central London being the most expensive as could be expected.
REFERENCEThe government publishes guideline hourly rates used for summary costs assessments in court. Actual rates may vary but this list provides useful guidance.
INFOIt should be noted that the hourly rates charged include all of the firm’s overheads including professional indemnity insurance and do not reflect what the firm’s employees and partners are actually paid, that figure would be much lower.
The main issues with hourly rates are:
They give no indication as to the total cost of the case, clients won’t know how many hours are required to do what they require.
TThe cost of disbursements and expenses is not included in the fees and clients can be be surprised to see how much things like photocopying can add to the total bill.
Should the client be paying the partner’s rate when the work can easily be done by a more junior member of staff such as a paralegal?
Should the client pay for a trainee or junior staff member to be present at a meeting taking notes in addition to the lawyer’s fees?
In many cases, firms are able to give an estimate of the cost for dealing with the case in question, however, this is just that, an estimate, and the actual cost may be much higher if things don’t go according to plan.
The SRA Code of Conduct states that solicitors must give clients the best possible information about costs.
O(1.13) SRA Code of Conduct
O(1.13) clients receive the best possible information, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of their matter;
INFOCosts should be explained from the beginning, with details as to how they are calculated and it should also be clear that VAT will be added to the total amount. A lot of legal work is done for businesses who are able to claim it back, however, individuals should be aware that quotes for legal services will be exclusive of VAT.
In contrast, fixed fees are more accurate reflections of how much will be charged, however, many quotes do reserve the right to increase the fees if things get complicated and the fees don’t include expenses and disbursements. There is less chance of disputes and disagreements with fixed fees, unless the work turns out to take a lot longer than anticipated and the fee has to be increased. If that’s the case, the client should be notified immediately.
Fixed fees are used for work of a standard nature which can be quoted in advance, such as conveyancing, wills, drafting contracts and other documents where the amount of work involved and estimated time has already been calculated by the firm. For these services, clients can shop around and compare various quotes, however, it’s important to know exactly what’s included in the quote and what isn’t. For example, domestic conveyancing quotes will not include costs and disbursements and the client should not only be made aware of this fact but should also be informed about those costs and given an estimate.
It is also important to find out what the actual quote is once VAT is added to it and whether VAT will be added to the additional costs referred to. This is of more relevance to individuals than businesses, since VAT registered businesses are able to reclaim it back.
In some cases there can be alternative ways of funding legal services. These alternative funding options only apply to dispute resolution (contentious legal work) and are limited to certain types of action.
There are also sources of free legal advice and public funding, see below.
The SRA requires solicitors to ask clients whether they may have legal expenses insurance as part of their existing home insurance policy. Not everyone is aware of the existence of this cover, and it is necessary to check the terms of the policy to establish what is covered. Insurance policies typically cover certain contentious areas such as employment, personal injury and consumer disputes. Insurance companies will assess the likelihood of succeeding before agreeing to fund the proceedings. Insurers have their own panels of approved solicitors which they use so there is no option to use another firm. It is essential to co-operate with the insurance company and agree with their terms.
Conditional fee agreements (CFAs)
Commonly referred to as “no-win-no-fee”, these are most commonly used in personal injury and clinical negligence claims but they can also be used in other areas where the court orders the losing party to pay the legal costs of the winner. The amount of costs ordered by the court may be lower than the actual fees and disbursements to be paid, so the client will be expected to make up the difference, usually from the amount of money received. This makes them most suitable for claimants, however, defendants can also use them.
Conditional fee agreements have been used in a number of consumer credit cases where the claimant (a bank or debt purchaser) has lost and been ordered by the court to pay the defendant’s legal costs. Even when the defendant did not make any money out of the proceedings, they were still able to take advantage of this arrangement and get suitable legal representation at no cost to themselves.
In the Santander v Mayhew case, Santander, the claimant, was ordered to pay tens of thousands in costs.
Santander v Mayhew judgment
15. It follows from what I have said above that the claim is dismissed. The claimant must pay the Defendant’s costs to be subject to detailed assessment if not agreed.
INFOConditional fee agreements are not allowed in family or criminal cases.
When considering a CFA, solicitors have to assess the chances of winning the case and get financial compensation as a claimant (damages) and/or get the court to order the other side to pay the client’s legal costs, which can be as either a claimant or a defendant but only if the client wins. For this reason, CFAs will only be considered if the chances of winning (or getting an early settlement with costs) are good.
When a solicitor assesses the likelihood of winning the case, he/she will quote a success fee which is relative to the adverse risk (risk of losing the case). The higher the risk, the higher the success fee, however, success fees are subject to limits set by law. These limits depend on the type of case being handled.
IMPORTANTConditional fee agreements can be complicated so it’s important to ensure everything is clearly set out in writing and explained to the client in detail, such as what happens if you lose the case, any disbursements or premiums to be paid by the client, etc. in each particular case.
Conditional fee agreements are not normally used in employment tribunal claims or in the small claims track (money claims up to £10,000 or personal injury claims up to £1,000) because costs are not normally awarded against the losing party, so even if the client wins, there will be no way of recovering the legal fees through a costs order.
Damages based agreements
Similar to conditional fee agreements, these were originally introduced for employment tribunal claims and recently extended to cover other litigation such as personal injury claims. Unlike CFAs described above, the lawyers charge a percentage of the compensation awarded by the court or tribunal. The idea of using them for employment cases was precisely because the Employment Tribunal does not usually award costs against the losing party, so the only way for a claimant to pay for legal services under these agreements would be out of their own compensation.
The percentage that a solicitor can charge is capped at the following levels:
Personal injury cases: 25%
Employment cases: 35%
All other cases: 50%
Due to the nature of these agreements, they can only be used by claimants who hope to get compensation.
The Legal Aid Agency was established on 1 April 2013 to replace the Legal Services Commission. The Agency is an executive agency of the Ministry of Justice. It is funded by the government but it’s separate from the government and provides but civil and criminal services in England and Wales. Eligibility for legal aid is subject to satisfying the means tested criteria.
REFERENCEThe government website has a tool to find out whether you may be eligible for legal aid. See legal aid checker.
Civil legal aid
The provision of legal aid for civil matters has been drastically reduced over the past few years and is currently only available for:
Risk of homelessness: eviction and repossession;
Housing disrepair affecting health;
Family matters: restricted to domestic violence;
Employment Tribunal: restricted to issues involving discrimination;
Immigration issues: only available in relation to detention, or for individuals fleeing torture, persecution or seeking asylum.
Criminal legal aid
Civil legal aid has been cut down quite considerably, however, there is still state support for criminal matters. Provider of criminal legal aid work under an agreement with the Legal Aid Agency. The Agency will assess eligibility both in terms of financial circumstances and it being in the interests of justice that they receive legal aid to support their defence.
Things like previous convictions, the nature of the offence and the possibility of a custodial sentence will be taken into account to determine if an applicant qualifies for legal aid. The more serious the charge or possible consequences, the more likely the chance of qualifying for legal aid.
An individual detained at a police station can request legal representation and the police are obliged under the Police and Criminal Evidence Act (PACE) to ensure that the client can make a call to the Defence Solicitor Call Centre (DSCC) or their own legal representative. If the DSCC can’t make contact with the individual’s own solicitor within two hours, a duty solicitor will be sent. If the case progresses to court, it is possible to revert back to their own solicitor. The DSCC is open 24/7 every day of the year.
Criminal Defence Direct
Criminal Defence Direct offers telephone advice to individuals detained at police stations in England and Wales. Its services are limited to those offences where advice is only by telephone, mainly drink-driving and other offences that do not carry a prison sentence. Criminal Defence Direct can also contact an individual’s own solicitor upon request.
Magistrates Court Duty Solicitor Scheme
Duty solicitors are available for people who arrive for their hearings without legal representation. The duty solicitor schemes in England and Wales are run by the Legal Services Commission. Each magistrates’ court that operates such a scheme will have one or more solicitors allocated to any given court session. The duty solicitors rotas are published by the government website.
The legal funding methods seen above involve recovering the legal fees and in some cases, also expenses and disbursements, from various sources such as insurers, the losing party, a client’s own compensation or the public purse in the case of legal aid. In addition to those methods, there are sources of legal help and advice that are free, meaning they are not subject to recovery from other sources.
Some solicitors do Pro Bono work. Pro Bono means “for the public good”, i.e. free, without paying any fees. Most Pro Bono work is done by organisations dedicated to offering help and support to people who can’t afford to pay for legal services, but some private practitioners and firms occasionally take on Pro Bono work.
Free legal advice is provided by:
Citizens Advice Bureaus (CABs). They are staffed by a mixture of volunteers and salaried staff and offer basic advice on common issues such as employment, housing, benefits, consumer disputes and debt. A few have a qualified solicitor on board and they can often refer people to other sources of legal advice.
Law centres. Provide legal advice for people who can’t afford the services of a solicitor, often in the evenings or after hours. There are a number of local centres, a full list can be found here: law centres.
Legal advice centres are often run by universities and other institutions.
REFERENCESee opposite for links to sources of free legal advice.
The losing party is usually ordered to pay the legal costs of the winning party, that means if you lose you may have to pay your opponent’s costs, although this doesn’t apply to most Employment Tribunal or Small Claims matters. Small claims are restricted to money claims under £10,000 or personal injury claims under £1,000.