No Win – No Fee, CFAs, Legal Expenses Insurance and Solicitor’s Negligence

Emma Slade, a specialist professional negligence solicitor, looks at No Win – No Fee, CFAs and Legal Expenses Insurance in the context of solicitor’s negligence claims

Whenever a client becomes embroiled in any sort of litigation or lengthy legal dispute, their main concern is – quite understandably – “how much is it going to cost me?” This is never an easy question for a lawyer to answer, but regardless of what the answer is, there is a duty upon a solicitor to give consideration to the most suitable method of funding available to the client.

The Solicitor’s Code of Conduct gives guidance on how a solicitor should deal with his client and legal fees is one of the first issues it addresses. Paraphrasing the Code, it says:

• Any fee arrangement entered into with a client needs to be suitable for the client’s needs and take into account the client’s best interests

• A discussion needs to be had on whether the likely outcome of the work would justify the anticipated expense, especially taking into account the potential risk of being liable for another party’s legal fees

• Consideration must be given as to whether there are alternative methods of funding the case (eg public funding, legal expenses insurance, conditional fee agreements)

• The lawyer must give the client the best information available  – both at the outset of the retainer and throughout the course of the case – concerning the likely overall cost of the matter

It is the last point which can cause some solicitors to become unstuck as many fail to realise (or forget) that there is an ongoing duty to review the issue of costs with their clients. 

Most solicitors have a system whereby they will regularly update their clients on the level of costs incurred, but many overlook the fact that the review should consider not only the legal costs incurred to date but also the method of funding and in particular whether the current method of funding continues to be the one that is most suitable for the client.

Some examples of how funding options might develop over time would include:

• A change in the Client’s financial circumstances meaning they become eligible for public funding

• A case becomes suitable for No Win – No Fee (CFA funding) – and even if the solicitor is not be prepared to deal with the case on a No Win, No Fee basis they should advise the Client that other solicitors may be willing to do so

• ‘After the Event’ legal expenses insurance (LEI) may become required or the indemnity level of an existing LEI policy may need to be ‘topped up’.

• There is a change in the law which alters funding arrangements

The latter development is a particular problem for solicitors at the moment. In April 2013, the Jackson Reforms came into effect, meaning that success fees on No Win – No Fee CFA’s and the premiums on ‘After the Event’ LEI policies could no longer be recovered from the losing party. Those costs now have to be paid by the client. Solicitors had a lot of advance notice that the changes were going to be made and those who were on the ball made arrangements for existing clients to be protected by ensuring that they were covered under the old regime. However, not all solicitors acted with foresight.

Because larger litigation cases can take several years to conclude, it is only now that a lot of clients whose solicitors failed to ensure that No Win – No Fee CFA’s and LEI policies were entered into prior to 1st April 2013 are now facing large costs liabilities which could have been easily avoided.

In these instances – as in the other examples given – the Client will have a good claim against their solicitor for negligence as not only has the solicitor breached their own code of conduct but the Courts are willing to use that as a definition of a ‘breach of duty of care’ in common law negligence.

If you feel that you have a claim for professional negligence against your solicitor in relation to a No Win – No Fee claim, please call Emma Slade on 0808 139 1595 for a free case assessment. Alternatively, you can contact us by e-mail at [email protected]

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