Will Dispute News – Important Changes to Litigation Funding

22 February, 2013
by: Cripps Pemberton Greenish

In recent years it has been possible for solicitors to act for clients in cases, including Will dispute and other Estate claims, on a ‘no win, no fee’ basis under a Conditional Fee Agreement (CFA).

If we act for a client in connection with, for example, a Will dispute or inheritance claim under a CFA we are not be paid anything unless and until we have won their case. In that situation, we would be paid our standard charges plus an extra percentage known as the ‘success fee’. A large proportion of both the standard charges and the success fee would normally be paid by the defeated opponent, leaving our client with little or nothing to pay direct to us out of the money won in the case or from their own resources.

In many cases, clients also bought special ‘after the event’ (ATE) insurance policies to cover the risk of having to pay the opponent’s costs if the claim failed. The premiums for those policies were usually ‘self-insured’, meaning that they only became payable if the client in fact won the case. Under the costs rules, that premium could then be claimed, with the other costs, from the defeated opponent.

The Government has, however, decided to change the rules on the recoverability of success fees and ATE premiums. Where a CFA or ATE insurance policy is signed on or after 1 April 2013, the success fee or insurance premium will not be recoverable from the defeated opponent. They will be payable by the winning party out of the damages recovered or other resources.

Whilst it will still be possible to have a CFA and/or an ATE policy in many cases after 1 April 2013 it may no longer be in a clients best interests to fund their case in this way.