The recent decision in the case of Choudhury (suing by his Litigation Friend) v Markerstudy Limited is evidence of the problems that can occur if a party does not pay sufficient attention to their funding arrangements.
In Choudhury, the Claimant's claim was purported to have been funded by way of a Collective Conditional Fee Agreement dated 19 December 2011.
The claim arose from an accident on 12 March 2013 and the Claimant's Solicitors were quick to sign the Claimant up to the CCFA before the additional liabilities became irrecoverable post 1 April 2013.
The claim settled in the sum of £1150.00 and the Defendant raised arguments against the validity of the funding arrangement as it was contended that no work that fell within the definition of legal services pursuant to section 199 of the Courts and Legal Services Act 1990 has been done.
There had been a single telephone call and a letter to the Claimant prior to 1 April 2013. The letter was related to funding issues and DJ Wildsmith found that the single unit telephone call was related to those same funding related issues.
As such, no litigation services had been provided under that agreement prior to 1 April 2013 and the Claimant's funding arrangement was found to be unenforceable.
This is a reminder to check the arrangements that you have in place where CFA's and CCFA's were entered into in the lead up to 1 April 2013.
If the Court considers that no litigation services were provided then the CFA will be unenforceable as the agreement will not provide for the success fee to be capped at 25% of damages. It is not just the additional liabilities that will be lost, it is the entire claim for costs.
It is worth reviewing any cases where the argument may be raised and considering whether alternative funding should be put in place. Don't leave it to chance or you may find you are unable to recover any costs on conclusion of your case.
If you need any advice on funding options, then get in touch with us at Sextons Legal Costs for a free appraisal of your current arrangements.