ENGLAND & WALES Law and Practice Contributed by: Damian Taylor, Olga Ladrowska, Christy Conlon and Nathan Barrow, Slaughter and May
yer specifying that legal fees will only become payable in certain circumstances) are permitted in civil litiga- tion. Both are regulated by statute, and arrangements that do not comply with the relevant rules will gener- ally be unenforceable. • Conditional fee agreements (CFAs) are made between a litigant (either claimant or defendant) and their solicitor. In its purest form, a CFA pro- vides that a solicitor becomes entitled to pay- ment for their work only if a threshold of success (however defined) is met; otherwise, the solici- tor receives nothing. In practice, most CFAs are structured more flexibly, so that a litigant pays their solicitor at a discounted rate throughout the life of a case. If the success threshold is met, the solicitor becomes entitled to top up their fees to the undis- counted rate, plus a success fee of up to 100% of the undiscounted rate. • Damages-based agreements (DBAs) are made between a claimant and their solicitor. The solici- tor’s entitlement to payment arises only if the claim succeeds, and their payment is calculated as a percentage of the damages award or settlement payment (subject to a cap of 50%). In practice, the flexibility of CFAs makes them sig- nificantly more common in the market than the more restrictive DBAs. 2.7 Time Limit for Obtaining Third-Party Funding There are no formal time limits within which third-party funding should be obtained.
The steps expected of litigants before proceedings commence vary between the different protocols. Broadly speaking, the protocols expect that the claim- ant provides written details of the claim to the defend- ant before commencing an action, including a sum- mary of the relevant facts and the claimant’s desired remedy. The defendant is expected to respond to the claimant within a reasonable period, setting out which facts are accepted or disputed and any counterclaim the defendant wishes to bring. Claimants and defend- ants are expected to disclose to each other any key documents relevant to the dispute. The pre-action requirements seek to ensure that litigants have sufficient information to understand each other’s case and generally to support efficient management of proceedings. They also encourage litigants to consider alternative dispute resolution options to achieve settlement. Although compliance with the pre-action protocols is not mandatory, there can be significant consequences for failure to comply. The court may take non-compli- ance with the protocols into account when awarding costs or interest rates on amounts due, or when con- sidering case management directions. 3.2 Statutes of Limitations Claimants must bring their claims within the pre- scribed periods of limitation; otherwise, the claims become time-barred. Most limitation periods for dif- ferent causes of action are laid down in the Limitation Act 1980. The basic limitation rule for claims based on breach of contract, tort or breach of trust is six years. Other limitation periods include one year for defamation claims and 12 years for claims arising out of deeds. A claim to enforce an arbitral award is usu- ally subject to the basic six-year limitation rule. The limitation period usually commences when the cause of action arises. Therefore, in contract claims, the limitation period runs from the date of the breach of contract. In tort claims, the accrual of the cause of action will vary depending on the tort in question. In negligence claims, for example, the cause of action typically arises on the date on which the damage is suffered.
3. Initiating a Lawsuit 3.1 Rules on Pre-Action Conduct
Before commencing proceedings, litigants are expect- ed to follow the guidelines on pre-action conduct. These rules are contained in pre-action protocols that apply to certain types of dispute (such as debt claims and professional negligence claims). There is also a general practice direction, called the Practice Direction on Pre-Action Conduct and Protocols, which applies if there is no specific pre-action protocol for a particular dispute.
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