Why pay legal costs?

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Many of our clients regard legal costs as a necessary evil. In some cases, for example where our clients are being sued or facing legal difficulties, and they have no insurance cover in place for legal costs, they may have no option but to retain lawyers to protect their interests. In those cases, although it may feel like lawyers are a necessary evil, there is some value to having the claim resolved quickly and a lawyer can often facilitate a settlement at a reduced level.  In other words, it is often possible to say that lawyers have “added value” to the client. Having said that, the whole issue of legal costs is under the microscope when it comes to defending claims. Common questions are – how much will it cost us to engage the lawyer and what are the potential best case / worst case scenarios?   Although “no win no fee” arrangements or Damages Based Agreements (DBA) are problematic where the client is defending a large claim, many clients still overlook the fact that a Conditional Fee Agreement (CFA) is still possible. In certain cases we may be able to agree a CFA with clients which effectively introduces a bonus element if a designated outcome is achieved. In one recent case we did this where we agreed at the outset that a settlement at or below a certain level would trigger then an uplift on our fee. CFAs are also great ways for clients to improve cash flow. They effectively pay their lawyers less and the uplift or bonus is tied to a successful outcome.

Although lawyers are not necessarily known for their dynamism, the one area that has seen huge changes in the last few years is the availability of litigation funding. This is now widely available for clients who have (1) a good arguable claim and (2) good enforcement prospects. In our experience many clients do not properly consider the funding options which is unusual as, on any basis, litigation is usually an unbudgeted expense.

We are increasingly being asked to recommend funding options to clients so that they can reduce the financial risks associated with litigation and free up cash flow. That has led us to develop links with non-recourse litigation funders who can assist clients on certain cases. As part of that package we often agree to work on a contingent fee basis, either on a CFA or a DBA i.e. “no win no fee” or “no win some fee” basis. The legal costs payable under these agreements can be either wholly or partially contingent on success and/or on a recovery being made. From the client’s point of view, in some cases it is possible to outsource all of the risks of the litigation and avoid paying all the legal fees through a combination of the right lawyers and the right non-recourse funder. Even the adverse costs exposure is covered by after the event insurance.

In short, if you have the right claim i.e. good prospects of success as well as good enforcement prospects you should consider discussing this with one of our team. It is just possible that we may be able to get you a result without you having to pay any legal costs at all.

BDM is a specialist shipping law firm offering high quality legal advice and representation at a reasonable price. Please follow us on social media by clicking below.

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