No win no fee but now possible charges we cannot afford

[OhHelpCanTheyDoThis]

Be gentle please. I know this might read like we have been grasping or greedy, but this legal case arose as part of a small inheritance and has been rumbling on for years. I am no high flyer, struggle to make ends meet and am totally out of my depth here.

We are in a pickle. I am one of a small group who are taking legal action against a solicitor because the bad advice we were given cost us several thousand pounds. We were advised by a no win no fee solicitor that we had a strong case for negligence and that we could raise a claim against the original solicitor's insurer. This is not a dodgy outfit, a proper solicitor who also takes on no win no fee cases if she thinks she can win them.

We went over and over the paperwork and were repeatedly reassured that there was no financial risk to us - the no win no fee solicitor would take a percentage of the money we were awarded and we would have no costs of we did not win. We were assured that our original solicitor had been negligent and we were only interested in reclaiming the costs that we had to pay due to her incompetence.

However we have been told today that the rules have changed. Our solicitor needs to employ a Counsel to act for us. If we win, he will take a 'Success fee', which is his costs plus 50% of whatever his costs were. We have been told that it is possible that this will be more than any damages we might be awarded.

We have said that we would rather than not go ahead if we might end up with a bill - however she has said that if we were to pull out of the case against her advice (as this would be) then we would be liable for all her costs to date - which works out at several thousand pounds each.

We have been very clear all along that we would not proceed with any action if it might leave us at financial risk (we have this in writing to our solicitor). All the way through she has reassured us that this could not happen. Now it seems we are stuck.

Any ideas. Can this happen? Do we have to just suck it up an hope for the best?

[Moid1]

First thing is to look at the client care letter that she should have sent you.. What does it say? If there is no client care letter then she is not following law society regulations.

Ask her how the rules have changed? Confused, why does she suddenly need to employ counsel. Ask for chapter and verse, then google it? There is loads of information online.

I am a solicitor though not a litigator.

[OhHelpCanTheyDoThis]

Thank you Moid1. We did have a client care letter way back when this all began - over 2 years ago - I will look it out.

I know that we were really clear that we would not pursue the case at all if there was any financial risk.

Summarising from the e mail we were sent:

Counsel thinks we have a good case. Not sure quite the relationship between our solicitor (litigator? I don't know the difference, sorry) and the Counsel,
He wants to enter into a CFA (?) with us in order to 'issue proceedings'

She then wrote:
"I must remind you though that if I enter into the CFA with Counsel, the rules regarding CFA’s changed on the 1st April 2013. Although my CFA pre-dates that time, his does not which means that if you are successful, we will not be able to recover Counsel’s success fee from the other side; you will need to pay this yourself out of the damages (because our CFA pre-dates 1st April 2013, we can recover the CFA from the other side)."

When we then said, OK, we don't want to go ahead on that basis, we don't want to enter into a CFA with him, she then said that if we were to drop the case against her advice, as this would be, then we would be liable to her pay all her costs. Several thousand pounds each.

[traviata]

If you win, it is very likely that the other side will be ordered to pay your costs. This will include any success fee, provided that the judge agrees it was set at a reasonable amount.

The risk to you would come if you had agreed to pay your lawyer an amount, and the judge decided that the other side only had to contribute part of that.

From what you have said so far, the success fee indicates that your counsel would also be working on a conditional fee basis. So if you win, the other side would probably have to pay (most of) your legal costs; the question is what you would have to pay if you lose.

Do you have insurance against the risk of losing? If so, is your legal insurance company willing to finance counsel?

[traviata]

sorry, cross posted.

Ignore my first paragraphs. The question about insurance still stands.

[OhHelpCanTheyDoThis]

Yes. Insurance against the risk of losing was definitely mentioned in our initial conversations with our solicitor. Although my understanding is that it is her who has this insurance (since she will be liable for all the costs if we lose).

If we lose, there is no problem. It is only if we win that we then, under the new rules, would be liable for the 'Success Fee', which is not capped at a maximum value or percentage of the damages (as the solicitor's fee is).

(Sorry if I am not being clear - it feels like a bit of a quagmire and I don't completely understand it all...)

[OhHelpCanTheyDoThis]

To be clear, we have no problem with paying Counsel if we win. Even up to 100% of the money we are awarded in damages (although it would be a bit galling, since we are already several thousand pounds out of pocket).

But because it is not a big money case, and Counsel is expensive (I imagine), it wouldn't be hard for his fees to not only gobble up all the damages, but also to go over that amount, ending up with us owing him money. Which we can't afford.

[Moid1]

This has got to be a bit murky, as the law has changed. Not as cut & dried as she has explained, you are not the only person this will have affected.

I suspect hopefully a solution might be in the client care letter. Especially if you have a clear written paper trail that could support your argument. It might be that she is just trying it in on.

[OhHelpCanTheyDoThis]

OK thanks, I will check back the original letter.

I wonder whether it is worth approaching Counsel and explaining our predicament? Asking if the Success fee can be capped at 100% of any damages awarded.

Off to bed but thank you al for your help - will check back tomorrow.

[Littleoaktree]

Your solicitor is correct that the rules changed in April 2013 and this does cause a problem for any new CFA's ('no win no fee') as you can no longer recover the success fee from the other side if you are successful.

What I do not understand is why it has taken 2 years to get to the stage of deciding to issue proceedings for what sounds like a small straightforward claim - what is the total amount claimed by all of the claimants? Have any settlement offers been made by the other side? Have you made any settlement offers? On what basis is the negligence being disputed?

Also you appear (which I say without knowing the full picture) to misunderstand the position in respect of adverse costs (ie the other side's costs in the event that you lose). Your solicitor is not liable for these, you are. That is why she will have discussed the possibility of you taking out insurance ('ATE' or after the event) when you issue proceedings to cover those costs. You should (as others have recommended) re-read the retainer letter, the CFA and any other terms/conditions sent with them as there should be an explanation of adverse costs.

It is usual practice to instruct counsel (a barrister) to prepare particulars of claim when you issue a claim and to conduct the advocacy in court when it comes to hearings. It is not essential though and you can ask your solicitor if she is able to do this herself to save you costs. (Some solicitors do their own pleadings/advocacy, others don't)

(I am a litigation solicitor btw - feel free to PM me if you don't want to put too many details on the thread)

[Veritata]

I agree with Littleoaktree. This isn't directly my field, but I just wanted to add that some solicitors acted to protect their existing clients' interests before the new legislation came into force by formally engaging counsel under CFAs at that stage, even if they weren't sure whether they would actually need to instruct them. It could be worth asking why your solicitor didn't do that.