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How to pay for legal fees

How to pay for legal fees

Legal aid

Due to cuts by various governments legal aid is now no longer as widely available as it used to be.

There are large areas of law which simply do not qualify for legal aid at all, such as business disputes, most money disputes and conveyancing. 

If a legal dispute does still qualify for legal aid there are two tests that the Legal Aid Agency generally apply before granting it. The first is the means test. Unfortunately you need only have a very modest income, savings or assets before you are excluded by the means test. Generally legal aid is now reserved for only the poorest in society. Even if your financial means allow you to qualify for legal aid there will still be an assessment of the benefits which your case may bring. In broad terms you will have to demonstrate that there is some significant benefit in pursuing your legal matter. If your case is likely to fail then the Legal Aid Agency will rarely grant legal aid.

Even if legal aid is available, only solicitors who hold the necessary contract with the Legal Aid Agency can work under it. Many solicitors have stopped offering legal aid services and there are some places where there are few, if any, legal aid solicitors.It can be quite a challenge to find a solicitor who will undertake legal aid work even if you will qualify for it. 

There are a few types of legal aid, for example child care proceedings, where the means and merits test do not apply and people can automatically get legal aid. However, that does not apply to most legal disputes.

Private payment

If you do not qualify for legal aid and there are no other means of paying for your legal matter, then it is likely that you will have to pay for it yourself. 

Solicitors are free to agree with you whatever payment levels you, and they, wish, subject to it not being extortionate. Generally solicitors will either charge by the hour or a fixed fee.

It is important to be clear about the difference between a fixed fee and a quote. A fixed fee is a fixed amount that the solicitor will charge for the job, however long it takes. Often solicitors will specify in some detail what is covered in the fixed fee and if events or steps occur outside those specifications then further fees will be payable. However, in the main, if you are offered a fixed fee that should be what you pay for that service. 

A quote or an estimate is the solicitors estimation of what something may cost generally based on their hourly rate. It does not mean that the solicitor is contractually obliged to deliver the services for that fee. 

The traditional way for solicitors to charge would be by an hourly rate taking into account the number of hours spent on a matter. Generally the more experienced a solicitor or person dealing with a case the higher the hourly rate. In theory a more experienced person should take less time, so sometimes even if the hourly rate is higher the time spent maybe less leaving a smaller bill than with a solicitor quoting a lower hourly rate. It is important when being quoted fees based on an hourly rate to agree an estimate of what the fees are likely to be and ask the solicitor to tell you in advance if the fees are going to substantially deviate from that estimate.

If you are unhappy about a solicitors fees you can complain via the solicitor firm’s internal complaints system and you also have the right, in certain circumstances, to have those fees assessed by the court. 

There are some strict time limits on this and full details should be in the solicitor’s terms and conditions or on the invoice.

Legal expense insurance

Often people do not realise when they buy house insurance, car insurance or some other insurance policies that legal expense insurance may be attached to it. This is a product which will fund legal fees in certain types of cases and circumstances. It is always worth checking your insurance policies to see whether you have legal expense insurance which may fund your case. In the first instances you will need to contact the insurers. They will generally insist on you using their panel solicitor but in some circumstances you can insist on the right to use the solicitor of your choosing. You should make the claim with the legal expense insurer and resolve this issue before incurring costs with a solicitor.

Sometimes funding legal support comes with memberships or affiliations such as membership of a trade union. Again if you are a member of a trade union, a trade association or something similar it is always worth checking to see whether they will fund legal fees.

Conditional fee agreements

These are sometimes knowns as “no win, no fee” agreements. The principle of these is that the solicitor will not charge you if they lose the case, but if they win they will generally recover costs from the other side plus a success fee from you. They are usually used in connection with claims for compensation so the success fee comes out of any compensation award you receive. There are some quite complex rules governing how the success fee is calculated and how much it can be. 

You also need to take into account whether there may be a claim by your opponent for costs if you lost. You can have a no win no fee agreement where your own solicitor will not charge you, but your opponent could if you lose your case. In most personal injury/accident cases that risk is not high because a court would not generally make a cost order against you in those circumstances, but in other types of cases that risk is much higher. Sometimes it is possible to obtain an insurance policy which could cover that risk. You should discuss the costs risks with your solicitor so that you know what will happen in the event of you winning or losing.

Damages based agreements

In many types of legal claims, such as accident claims; in the event of a win, the solicitor will be able to claim legal costs from your opponents as well as a success fee from you. However, in some types of cases, like employment tribunals there are generally no costs awards, which means that the only source of payment the solicitor would have would be out of your compensation. Damages based agreements are similar to conditional fee agreements in that they are based on the idea of a deduction from compensation but often in damages based agreements the percentage is higher because the solicitor is not getting fees from anywhere else.

Funders

Of course many people borrow money to fund their legal fees, whether it be from a normal bank or the “bank of mum and dad”. However, there are now some legal specific funders who have entered into the market and will provide legal clients with a loan to fund their legal  fees. These are often complex arrangements and you need to be very clear about how they work and how much it will cost you before entering into them.