Funding Agreements
The 2003 legislation provides for conditional fee and litigation funding arrangements.
A conditional fee agreement is an agreement providing advocacy or litigation services that provides that fees or expenses are payable only in specified circumstances. This is typically a no-win, no-fee or limited-fee arrangement.
A litigation funding agreement is an agreement under which the funder agrees to fund in whole or in part the provision of advocacy or litigation services by someone other than the funder to a litigant, where the litigant agrees to pay, in addition to the fee payable, a sum to the funder in specified circumstances.
A conditional fee agreement which satisfies the conditions mentioned below is enforceable notwithstanding that it is a conditional fee agreement. Subject to this, conditional fee agreements are not enforceable.
The conditions applicable are as follows: it must be in writing; it must not relate to proceedings which cannot be the subject of an enforceable conditional fee agreement; it must comply with prescribed conditions.
Further conditions are applicable to a conditional fee agreement which provides for a success fee: it must relate to proceedings of a description prescribed or state the percentage by which the amount of fees which would be payable if it was not a conditional fee agreement is to be increased. It must state that percentage must not exceed a percentage specified in relation to the description of proceedings by regulations.
Family and criminal proceedings may not be the subject of a conditional fee agreement. Family proceedings cover most proceedings in relation to domestic and matrimonial matters, adoption, domestic violence, maintenance, etc.
The Lord Chancellor may by regulations amend or vary the proceedings which are precluded from qualifying for conditional fee agreements.
Regulations may prescribe variations of the above precluded category.
Regulations may provide that before providing litigation services to which a conditional fee agreement applies, prescribed information must be provided. Different arrangements may be made in respect of different categories or descriptions of conditional fee agreements.
Before making regulations, the Lord Chancellor shall consult the Lord Chief Justice, the Law Society, the Bar, and other appropriate consultations.
A litigation funding agreement that satisfies the conditions below is enforceable. The conditions are as follows:
- the funder must be a prescribed person or a person of a prescribed description;
- the agreement must be in writing;
- it must not relate to proceedings which cannot be the subject of an enforceable conditional fee agreement;
- the agreement must comply with prescribed conditions;
- fees payable on the making of the agreement must not exceed the amount prescribed;
The sum to be paid must consist of costs payable to him in respect of the proceedings to which the agreement relates, together with the amount calculated in prescribed circumstances, by reference to the funder’s anticipated expenditure in funding the provision and, in prescribed circumstances, by reference to the damages recovered by the litigant in the proceedings.
The amount calculated above must not exceed such limit as may be prescribed in relation to proceedings of the description to which the agreement relates. Requirements may include requirements which provide prescribed information before the agreement is made.
Orders made in proceedings may, subject to the case of court proceedings, include provisions requiring payment of such an amount payable under the litigation funding agreement. Rules of court may make provision in respect of the assessment of costs which include fees payable under a litigation funding agreement.
In any proceedings in which the individual, for whom litigation services are provided under a litigation funding agreement, are decided in favour of the unfunded party, the court by which the proceedings were decided may make an order for the payment by the funder to the unfunded party of the whole or any part of the costs incurred by the unfunded party.
Such an order may only be made if an order for costs could have been made but generally. No appeal lies against an order above or refusal to make other than on a point of law. The court decides proceedings in favour of an unfunded party, and an appeal lies against the decision; the court may, if it thinks fit, refuse to make an order immediately. If it does make an order, it is not to take effect until the time for the appeal has expired.
Where, in any proceedings, a cost order is made in favour of a party who has taken an insurance policy against the risk of incurring the liability, the cost payable may, subject in the case of court proceedings to rules of court, include costs in respect of the premium of the policy.