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Access to Justice and Funding

Damages-based agreements and other alternative funding

  • 3 things to know
  • Component 1

Overview

Main sources of funding for a civil case, damages-based agreement and third party litigation funding.

What you need to know

Answer each one before you reveal it.

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Key term

Name the main sources of funding for a civil case.

Key term

What alternative methods of funding exist outside legal aid?

Key term

What is a damages-based agreement?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Name the main sources of funding for a civil case.

    Model answer

    The main sources of funding are legal aid, private payment, insurance and conditional fee agreements. Trade union support and commercial litigation funding are further sources.

  2. 2

    What alternative methods of funding exist outside legal aid?

    Model answer

    Alternative methods of funding include insurance, union support, conditional fees and third party investment. Each method depends on someone other than the client carrying part of the risk.

  3. 3

    What is a damages-based agreement?

    Model answer

    A damages-based agreement pays the lawyer a percentage of the damages recovered. The lawyer receives nothing at all if the claim fails.

  4. 4

    When did damages-based agreements become available for litigation?

    Model answer

    Damages-based agreements became available for civil litigation on 1 April 2013. Section 45 of LASPO and regulations made under it permitted them.

  5. 5

    What caps apply to damages-based agreements?

    Model answer

    A personal injury agreement is capped at 25% of damages and an employment case at 35%. Other civil cases are capped at 50% of the sum recovered.

  6. 6

    Why are damages-based agreements little used?

    Model answer

    Difficulties in drafting and uncertainty in the regulations discouraged lawyers from offering them. Restrictions on mixing them with other funding also limited their use.

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