Self-help guide
Before you start thinking about your funding options, we strongly suggest that you read our guide to the principles of understanding legal costs. If you have not yet found a solicitor to act for you, we also recommend checking our guide on how to approach a lawyer for the first time.
You should feel free to ask your solicitor about each of the funding options available. It may also be worth shopping around to see if another solicitor will offer you a more favourable arrangement, particularly about terms of the conditional fee agreement (CFA).
Before-the-event (BTE) insurance
If you have decided to take legal advice, you should always check your insurance policies to see if you have legal expense insurance (LEI) cover. The details will be contained within the policy — some household and car insurance policies include LEI cover as an incidental benefit of the policy without you being aware of it. If you discover you do have LEI, then make sure it covers clinical negligence claims — it could save you money if it does.
BTE insurance policies vary — some are more generous than others, offering up to £20,000 (or sometimes even more). If you have the benefit of legal expenses cover, it may cover the cost of some or all your disbursements, as well as some or all of the legal costs of investigating your claim.
However, a potential problem with BTE cover is that insurers often only cover you to see a lawyer who is on their panel. It is quite common for insurers to put together a panel of lawyers based not on their expertise and skill in this area of work, but rather their hourly rate. If you are appointed a solicitor by your insurer, you should ask whether they are accredited in clinical negligence work.
If your BTE insurer says they will not fund the solicitor of your choice and that you have to use one of their panel firms, seek advice from your preferred solicitors, as they may be able to persuade the insurer to change their mind.
If you are member of a trade union, it is worth checking the terms of your membership as you may be covered for legal advice.
BTE insurance is not as common as it once was, but it is still worth checking your policies and/or memberships. If there is legal expenses cover, you should check the policy terms in relation to time limits for making a claim to the insurers. If there is a time limit, you should submit details to the insurers within this period to avoid a refusal of cover at a later stage. If the period for making a claim is not clear, you should speak to the insurance provider.
Legal aid
Up until April 2013, legal aid was available for a range of potential clinical negligence claims. Legal aid was granted where clients were able to show that their claim appeared to have reasonable prospects of success and that they satisfied the legal aid financial means test. However, this all changed, and now only certain types of clinical negligence cases may be eligible for legal aid.
Essentially, legal aid is now only available for claims involving babies who have sustained brain injury at birth. The requirements are:
- there is a neurological injury resulting in a physical and/or mental disability,
- the injury must have been caused by clinical negligence,
- the negligence must have occurred whilst the individual was in the womb, during their birth, or within eight weeks after their birth, and
- the person must show that they were born during or after the 37th week of their mother’s pregnancy.
As a result of these changes, it is very difficult to get legal aid, although you should consider instructing an Avma-accredited solicitor who is able to offer legal aid funding if you wish to investigate a claim for complex injuries such as cerebral palsy. To find out more, read our guide to claims for birth injuries.
If you do obtain legal aid and your case is run using this funding, you do not pay a success fee out of your damages. That is an important consideration, as it means that the damages awarded are preserved and can be applied to the cost of caring and providing for the injured person for the rest of their life.
However, even if you can obtain legal aid, it can be difficult for lawyers to run your case because the Legal Aid Agency (LAA) has restricted the amount of money your lawyer can spend on expert’s fees. In practice, the fees are so low that many medico-legal experts will not undertake work at legal aid rates. Given the importance of the expert’s opinion and the fact that your claim will largely stand or fall based on the strength and quality of your medical expert opinion, this is a significant factor. You also need to bear in mind that the NHS hospital trust (or private hospital and/or obstetrician) involved in the claim is unlikely to be faced with the same restrictions on funding.
Please carefully read the information on conditional fee agreements (CFA) and after-the-event (ATE) insurance policies below. You will note that if you do opt for a CFA arrangement instead of legal aid, the solicitor is entitled to ask for a success fee which ispayable out of the award of damages, although not all solicitors take a success fee. Any non-recoverable part of the ATE policy will also be deducted from your damages. This must be weighed against the benefit of having the freedom to choose the best available medico-legal experts, which may in turn maximise the chances of your case succeeding.
For more details, please see a clinical negligence accredited solicitor who holds a legal aid franchise and is able to offer legal aid funding.
Paying privately
For many years, this was the usual way lawyers were paid. This method of funding means the solicitor charges an hourly rate for the work undertaken on your behalf. Usually, the lawyer will give an overall best estimate of the total likely costs to carry out the work, but will break this down by setting out what work will be done initially and give you a cost estimate for that bit of work. You will be expected to pay money to the solicitor first, before any work starts. This is known as money on account of costs.
If you pay for the work privately, you will be responsible for the solicitor’s costs whether you win or lose your claim. If your claim is successful, you will be able to recover the reasonable costs from the losing party. This is dealt with in our guide to the principles of understanding legal costs.
Solicitors’ hourly rates will vary from one firm to the next. The hourly rate will reflect where the practice is located (for example, a solicitor’s firm based in the centre of London is likely to charge a higher hourly rate than a firm outside London). The rate may also be influenced by how experienced the solicitor is. Solicitors are allowed to set their own hourly rate. Although the court may offer some guidance on what is considered reasonable, this is not binding.
Clients are not usually asked to fund the entire case privately. However, you may still be asked to pay privately to fund the initial investigation stage of your claim, especially if the chances of succeeding are unclear. Once a solicitor has decided they will take the case on, they will usually invite you to enter into a CFA with them — see below for more information.
Solicitors’ guideline hourly rates
Guideline figures listed by pay band and grade for different parts of the country are available on the GOV.UK website.
Conditional fee agreements (CFA)
This is the most common way of funding a clinical negligence claim. However, a solicitor is not obliged to enter into this type of agreement with you. See our guide on how to approach a lawyer for the first time for more information.
There is no guarantee that your solicitor will take your case on a CFA — instead, they will consider the merits of the case and the prospects of the claim succeeding. They also want to know that the costs of bringing the claim are going to be proportionate to the amount of money likely to be recovered.
You may be asked to cover the cost of further investigations to enable the solicitor to identify the prospects of the case succeeding, which may include obtaining a preliminary expert report. Once these additional investigations are complete, you can expect the lawyer to decide whether they are prepared to do the work on a CFA.
How does a CFA work?
CFA is often referred to as a ‘no win, no fee‘ arrangement, but this can be extremely misleading. A CFA works on the basis that the parties enter a contract. Like any contract, there are terms and conditions that need to be observed, so it is important that you read your CFA carefully.
What does the agreement deal with?
Typically, the CFA will set out the terms of business agreed between you and your solicitor. You should read the agreement before you sign it. The terms of business include information such as the solicitor’s basic charges — this will include the hourly rate charged by the solicitor, the success fee to be claimed, and whether the solicitor is prepared to offer a cap on your overall costs.
The Law Society model CFA agreement is about twelve pages long, including a glossary of terms and three schedules. Try not to be put off by this. You should pay particular attention to the following elements:
Schedule 1: The successs fee
This schedule sets out what percentage will be charged by way of a success fee. The success fee is only payable if the solicitor resolves your claim either by way of settlement (before or after proceedings) or where you succeed at trial.
The success fee is capped, which means the amount of money that can be taken is limited. The important bit to understand is that the fee can never take more than 25% of compensation awarded for general damages (pain and suffering) and past losses (note: not 25% of the total award of damages).
The success fee includes any success fee payable to the barrister.
Schedule 2: Solicitor’s basic charges
This schedule confirms the hourly rate you have agreed with your solicitor. The hourly rate may be reviewed at regular intervals and may increase from time to time, but you should always be notified of any increases.
This section is important, as it will also set out any cap for your overall liability to costs. Remember, not all solicitors will include a cap, so look carefully for this information. If it is not included, you can ask the solicitor to cap the costs; if they do not agree, you can shop around and see what other firms may offer.
Schedule 3: Right to cancel
Schedule 3 deals with your right to cancel the CFA. This only applies in limited circumstances, however.
Success fees and global offers
In practice, complications can arise with claiming success fees where a case has been settled on the basis of a global offer. A global offer is where the defendant makes an offer to settle by putting forward one figure that includes the award of damages as well as the sum payable by way of costs.
The difficulty with global offers is that they are not broken down into the sum allowed for past or future losses. This can make it difficult for a solicitor to determine what element relates to past losses and general damages. In turn, this makes it difficult to identify what part of the award of damages is subject to the 25% cap on success fees.
Appeals
If you decide to appeal a judgment, you will need to enter a new CFA with your solicitor. The appeal is a different action (not a clinical negligence claim), and as such the protection of a 25% cap on the success fee does not apply.
If you enter a CFA with your solicitor, you can expect to be advised to take out an ATE insurance policy too. See below for more information.
After-the-event (ATE) insurance
If you have signed a CFA, it is very likely that your solicitor will recommend you take out ATE insurance as well. As the name suggests, ATE insurance is taken out after the clinical negligence has occurred.
If you have entered a CFA with your solicitor, you will routinely be asked to take out ATE insurance. Since 2013, this will cover the cost of your liability and causation expert reports, which can be expensive and are generally best covered by way of ATE insurance. The premium payable for the experts report is recoverable from the other side if you win your claim.
Prior to 2013, a claimant who lost their case would be liable to pay the opposing party’s costs. However, in 2013, qualified one-way cost shifting (QOCS) was introduced to protect claimants from this. For more information on QOCS, please see our guide on principles of understanding legal costs.
Do I need ATE insurance?
The introduction of QOCS means that it is no longer necessary for potential claimants to take out insurance to cover the risk that they may lose and end up having to pay the winning party’s costs. However, generally you are well advised to take out ATE insurance to cover the cost of your own liability and causation expert fees, as well as protecting you from any adverse costs orders made against you or any cost penalties you may incur as a result of failing to beat a part 36 offer. See our guide on settling a claim for more information.
Who pays the ATE insurance premium?
If you take out an ATE insurance policy, you will be responsible for the cost of the premium. If your claim is successful, the opposing party will be responsible for paying the part of the premium that relates to cover for the liability and causation experts’ fees (sometimes referred to as ‘Part A’ of the policy).
The premium that relates to any additional benefits available under the policy will not be payable by the other side. The part of the premium which relates to adverse costs and part 36 penalties will be deducted from your damages. These additional policy benefits are sometimes referred to as ‘Part B’.
Damages-based agreements (DBA)
Damages-based agreements (DBAs) have been included for the sake of completeness, but they are rarely if ever used in clinical negligence claims.
DBAs were introduced by the government in April 2013, but proved to be unsuited for use in clinical negligence claims. Recommendations have been made to the government to change the rules around DBAs so they become a more useful funding option, but so far no significant changes have been made.
DBAs work on a contingency fee basis — a little like the American system of funding. With a DBA, the solicitor and client can agree that the solicitor’s payment will be limited to a percentage of the client’s damages, however the client’s damages are protected to the extent that the solicitor can never take more than 25% of a client’s damages. This 25% includes the solicitor’s costs, VAT, and counsel’s fees.
Fixed recoverable costs (FRC)
This section has been included for information — currently, there is no fixed recoverable costs (FRC) regime for clinical negligence claims. However, the government has been considering this option for some years. We do not know if this will be introduced — and if it is, exactly how it will work in practice.
If fixed costs are introduced, it will undoubtedly have an impact on you. A FRC regime will mean that your solicitor will no longer recover reasonable costs towards their hourly rate; instead, they will only receive the rates fixed by the government. The fixed costs rates are expected to be much lower than the reasonable rates currently allowed.
The FRC regime will sit alongside the CFA agreement — not replace it. This means that you will still enter a CFA with your solicitor and agree an hourly rate as discussed above, however the lower rates of pay allowed under the FRC regime will mean the shortfall between the contractual hourly rate and the fixed costs rate will increase and more money will be payable out of your award of damages to make up the difference.
See our dedicated page on FRC for more information on the concept.