Learning Outcomes
After studying this article, you should be able to explain the key client care duties relating to costs and funding, identify different sources of funding and their implications, and state what must be included in a retainer. You will also understand how to advise clients accurately on costs, assess funding suitability, and comply with professional rules on client care for the SQE2 assessment.
SQE2 Syllabus
For SQE2, you are required to understand the core client care requirements for solicitors. In revising this topic, focus on:
- the duty to provide clear information on costs and funding methods
- advising on scope of work and limitations set by the retainer
- the process and importance of sending client care and engagement letters
- the nature of public and private funding, and relevant eligibility criteria
- the implications of conditional and damages-based agreements
- the responsibilities relating to changes or adjustments in funding or instructions
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- What information about costs must be given to a client before starting substantive work?
- Name the most common sources of funding for legal services in England and Wales.
- What is the legal effect of a solicitor’s retainer and what are two mandatory elements that must be included?
- True or false? A solicitor may impose a blanket success fee of 100% under a conditional fee agreement in all cases.
- Why must clients be informed about the risks of public funding being withdrawn or limited?
Introduction
When acting for a client, you are responsible for ensuring that they are fully informed about the likely costs, available sources of funding, and the scope of your work. Providing clear and accurate client care is a professional requirement and central to ethical practice. This article focuses on what must be discussed at the outset, explains funding and costs, and outlines the need for an appropriate retainer agreement.
The Duty to Provide Costs Information
Solicitors must explain to clients how fees will be charged: whether by hourly rate, fixed fee, or as part of a conditional or damages-based agreement. Clients must understand their financial exposure—including the risk of paying the other party’s costs in litigation. Accurate and prompt information allows clients to make informed decisions.
Key Term: costs information
Details given to a client explaining how legal fees will be charged and estimated, including rates, likely total, and other possible liabilities.
Funding Options: Private, Public, and Alternative Methods
The main ways clients may fund their case are by private funding (paying their own fees), public funding (legal aid), or alternative agreements such as conditional fee agreements (CFAs) or damages-based agreements (DBAs). Third-party funding, insurance, and pro bono services may also be relevant.
Key Term: private funding
Payment of a solicitor’s fees by the client, typically by hourly or fixed rates, without contribution from legal aid or third parties.Key Term: public funding
Where legal aid covers all or part of a client’s legal costs, subject to a merits and means test by the Legal Aid Agency.Key Term: conditional fee agreement (CFA)
An agreement where payment of the solicitor’s fee depends on the outcome, often including a success fee if the case is won.Key Term: damages-based agreement (DBA)
An arrangement where the solicitor’s fee is a percentage of the damages recovered if the case succeeds, but nothing is paid if it does not.
The Retainer: Outlining Scope and Authority
A retainer defines the legal work you are instructed to carry out and is the basis of your contractual relationship with the client. Clear limits must be set at the outset so both parties understand which services are included and which are excluded. A retainer must also detail the circumstances in which it can be terminated, and the effect of such termination on costs.
Key Term: retainer
The contract between solicitor and client setting out what legal work will be done and on what terms, forming the basis for all rights and obligations between solicitor and client.
Worked Example 1.1
A client seeks initial advice about a potential employment claim. You discuss your hourly rate, give an estimate of total costs, and mention they may be eligible for legal aid. After assessing their income, you determine they do not qualify. What must you do before starting substantive work?
Answer:
You must provide written costs information, detail alternative funding options (such as CFAs or insurance), clarify whether your advice is preliminary only or covers full representation, and agree the scope of your retainer—recording it all in a client care letter.
Meeting Client Care Requirements
Professional rules require that clients receive a written statement at the start of every matter. This client care letter should confirm: what work will be done, who will do it, the basis for charging, cost estimates, payment arrangements, and complaint procedures. Clients must also be told about their rights to challenge or complain about their bill, and how to contact the Legal Ombudsman.
Key Term: client care letter
The written document provided at the start of an engagement, confirming essential details about costs, funding, scope, and client rights.
Explaining Risks and Adjustments
Clients should be warned about the possibility that legal costs may change if the work develops beyond what was anticipated, or if their funding status changes. Solicitors must update clients on any significant developments, including increased costs, withdrawal of public funding, or changes to the scope of the retainer.
Worked Example 1.2
You act for Amir under a legal aid certificate, but mid-way through the case, his financial circumstances improve and he becomes ineligible. What is your duty?
Answer:
You must inform Amir promptly that public funding will be withdrawn, explain the impact on his case and costs (including any liability for work already completed), and record this in writing.
Conditional Fee Agreements and Risk
CFAs and DBAs are increasingly common in civil litigation. It is essential that clients are told about success fees, the risk of losing and owing the opponent’s costs, the existence (or not) of insurance for adverse costs, and the limitations applicable to any funding agreement.
Worked Example 1.3
Sarah is considering a CFA for a personal injury claim. You estimate your success fee at 50%. Sarah asks if she will pay anything if she loses.
Answer:
You must explain that, unless separately insured, Sarah might still be liable for some expenses and possibly the opponent’s costs, but will not pay the success fee or base costs if the CFA covers both on a “no win, no fee” basis. All these details must be set out in the funding agreement and client care letter.
Exam Warning
For SQE2, you must be able to identify and advise on the best funding option for a client’s situation, considering their eligibility, the risks of each method, and compliance with all professional requirements. Failing to warn a client about liability for costs, or over-promising on eligibility for legal aid, can lead to negligent advice.
Complaints and Regulatory Requirements
Regulations require you to inform clients about their right to complain if dissatisfied with your service or bill. The letter must explain how complaints are handled and the time limits for escalating complaints to the Legal Ombudsman.
Revision Tip
When drafting a client care letter, use a checklist: fees/rates, estimated costs, funding options explained, who has conduct of the matter, scope of work, terms of termination, complaint procedure, and confirmation from the client.
Key Point Checklist
This article has covered the following key knowledge points:
- Clients must receive clear, written information on costs and funding at the start of the case.
- The solicitor must explain and agree the scope of the retainer, and put this in writing.
- Funding may be by private funding, public funding, CFA, DBA or other means, each with specific risks.
- Clients must be informed of all risks, including liability for costs, funding eligibility, and procedural steps.
- Client care letters must detail the complaints procedure, costs, and retainer scope.
- Any changes in costs, funding, or instructions must be promptly communicated to the client in writing.
Key Terms and Concepts
- costs information
- private funding
- public funding
- conditional fee agreement (CFA)
- damages-based agreement (DBA)
- retainer
- client care letter