These immortal words are inscribed in large friendly letters on the cover of the Hitchhiker's Guide to the Galaxy but DON'T PANIC could as well be said to a prospective party when the question 'how do I pay for all of this?' rears its ugly head.
Litigation costs are often thought of as a hurdle to enforcing rights but they need not be. Indeed, today, the range of possibilities in this area to cover legal expenses, help the client with their own costs and for protection in the event of adverse costs has never been greater.
We still have the traditional 'pay as you go' model of funding. As lawyers we like this of course because it means we get certainty of payment win or lose. It is however an inescapable fact that the financial strain of high costs – especially in cases that may run to trial or to a late stage mediation, make litigation often prohibitively expensive save for the most well-heeled of clients. There are however alternatives.
- The client may have existing insurance cover (often referred to as 'Legal Expenses Cover' or similar), as an add-on to a home insurance or other financial product, which may provide a fund to meet their costs and the other side's costs. However these policies are not always available.
- The client can look at a conditional fee agreement (often referred to as "No Win – No Fee") with their lawyer. This type of arrangement enables the client to access legal advice at no cost, with the fees rolled up and paid at the end of the matter and only if the case is won. A success fee is charged on top of the normal hourly rate which is agreed with the client.
- Another option which is gaining ground is specialist lending. Novitas Loans for example provide lending for claims against an estate, including Will validity and proprietary estoppel claims and claims under the Inheritance (Provision for Family & Dependants) Act 1975. Loans can be secured against a client's assets or, where this is not possible, the borrowing may be secured with an insurance backed product to cover the risk to the lender. The advantage for clients is that the costs of a case will not impact on their finances and the borrowing is flexible, with a drawdown facility to meet costs as the case progresses. The amount borrowed will be repaid at the end of the case either from costs recovered or the insurance product. The typical interest rate is 18% APR.
- Separate insurance to cover the repayment of the other side's costs and own disbursements (such as court and expert fees) if the client loses, is a must and would go hand-in-hand with a Conditional Fee agreement and a loan (the cover should also extend to repay the client's own costs if there is a loan).
Clients can therefore proceed with (a) not having to meet upfront the substantial costs of litigation; and (b) have security of mind with the protection of an insurance policy to cover the other side's costs and if necessary their own costs. Not all cases are suitable – the key criterion is a good case with reasonable prospects of success but the ability to access legal advice and pursue a claim is available for clients who need to maintain stable finances or those clients who do not have the appetite for risk.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.