Funding a negligence claim against a solicitor: the options explained

A negligence claim against a solicitor involves legal fees of its own and, if it reaches court, a risk of paying the other side's costs. This guide describes the ways such claims are commonly paid for and the legal rules behind each one. It does not compare providers or suggest which arrangement suits any particular claim. For how these claims work generally, start with suing your own solicitor.

Why costs risk matters

Two kinds of cost are involved: your own lawyers' fees, and the risk of paying the other side's. Under rule 44.2 of the Civil Procedure Rules, the court has discretion over costs, but if it makes an order, "the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party". The court may make a different order. So a claimant who loses can be ordered to pay the defendant's costs as well as their own. Each funding method below deals with one or both of these costs in a different way.

Paying privately

The simplest arrangement is to pay the solicitor's fees as the work is done, on an hourly rate, a fixed fee for a stage, or a mix. The client keeps all of any damages, but carries the full cost if the claim fails, plus any adverse costs order.

Paragraph 8.7 of the SRA Code of Conduct for Solicitors requires a solicitor to ensure that clients receive "the best possible information about how their matter will be priced", and about the likely overall cost, both at the outset and as the matter progresses.

Legal expenses insurance you may already have

Some home insurance and business insurance policies include legal expenses insurance. Whether it covers a claim against a solicitor depends entirely on the policy wording, which may include a limit on cover and a requirement that the claim has reasonable prospects of success.

Regulation 6 of the Insurance Companies (Legal Expenses Insurance) Regulations 1990 says that where a lawyer is used "to defend, represent or serve the interests of the insured in any inquiry or proceedings, the insured shall be free to choose that lawyer". The insured may also choose a lawyer whenever a conflict of interests arises. The Financial Ombudsman Service has read "inquiry or proceedings" as the point when it becomes necessary to issue court proceedings, so before then a policy may require a firm appointed by the insurer (a panel firm) to be used.

Conditional fee agreements

A conditional fee agreement (CFA) is defined in section 58 of the Courts and Legal Services Act 1990 as an agreement with a lawyer under which their fees and expenses, or part of them, are payable "only in specified circumstances". The phrase no win no fee is commonly used for these agreements, but what counts as a win, and what is payable if the claim fails, depends on the agreement itself. A CFA must be in writing (s.58(3)).

A CFA may provide for a success fee: an increase on the fees that would otherwise be payable. The agreement must state the percentage increase (s.58(4)). Under the Conditional Fee Agreements Order 2013, the maximum is 100% of those fees for the proceedings it covers. The Order sets a further cap, measured against damages, only for claims for personal injuries; it does not apply to claims about financial loss caused by a solicitor.

Since 1 April 2013, a costs order "may not include provision requiring the payment by one party of all or part of a success fee payable by another party" (s.58A(6), substituted by section 44 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012), with limited exceptions for particular kinds of proceedings. So if the claimant wins, the success fee is paid by the claimant, not by the defendant. A CFA is an agreement about the claimant's own lawyer's fees; it does not change any costs order the court may make in the defendant's favour.

Damages-based agreements

A damages-based agreement (DBA), under section 58AA of the 1990 Act, is an agreement under which the client pays the lawyer if the client obtains a specified financial benefit, with the amount of the payment "determined by reference to the amount of the financial benefit obtained". It must be in writing and comply with the Damages-Based Agreements Regulations 2013, in force since 1 April 2013. A DBA that does not meet the conditions is unenforceable.

Under the Regulations, the payment is the part of the sum recovered that the client agrees to pay the lawyer. For claims of the kind in this series, it must not exceed 50% of the sums ultimately recovered by the client, including VAT (regulation 4(3)). That cap applies only at first instance, meaning the original court, not an appeal. Costs paid or payable by the other side by agreement or order are deducted from the payment (regulation 4(1)).

After-the-event insurance

After-the-event (ATE) insurance is insurance taken out once a dispute has arisen against the risk of having to pay costs if the claim fails. The 1990 Act calls it a "costs insurance policy": one "insuring against the risk of the party incurring a liability in those proceedings".

Since 1 April 2013, section 58C(1) of the 1990 Act provides that a costs order "may not include provision requiring the payment of an amount in respect of all or part of the premium of the policy", subject to a narrow exception for certain expert reports in clinical negligence cases. For a claim against a solicitor, the premium is therefore the claimant's own cost. ATE insurance can be used alongside private fees, a CFA or a DBA.

Third-party litigation funding

A litigation funder is a business that pays some or all of the costs of a claim in return for a share of the proceeds if it succeeds.

In R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28, the Supreme Court held by a majority that funding agreements under which the funder is entitled to a percentage of the damages are damages-based agreements. If they do not comply with the statutory conditions, section 58AA(2) makes them unenforceable.

On 17 December 2025 the Ministry of Justice said it would legislate to make clear that litigation funding agreements are not damages-based agreements, when parliamentary time allows. No bill to do this was included in the King's Speech of 13 May 2026. At the time of writing (October 2026), section 58AA has not been amended and PACCAR remains the law; legislation.gov.uk is the place to check for any change.

Combining and changing arrangements

These arrangements are not exclusive. A claim may start on private fees for the initial investigation and move to a CFA or DBA later, with ATE insurance taken out at some point. Each agreement sets out what happens if the client ends it or changes solicitor, and it is the written terms that govern. For the steps a claim goes through before proceedings, see the pre-action protocol; for the deadlines, see time limits for claims against solicitors.

What a solicitor will want from you

• The engagement letter and terms of business from the solicitor you are complaining about.
• Every page of your home, contents, business and any other insurance policies, including schedules, so any legal expenses cover can be checked.
• A short chronology of the matter and the mistake, with key dates.
• What you lost and how you have worked it out, with supporting documents.
• Any expert report or second opinion you already have.
• Any funding discussions already had with another firm, insurer or funder, and any agreement you have signed.

Run the free case check

This guide is general information about the law of England and Wales. It is not legal advice. The terms of any funding agreement or insurance policy, and the time left to bring a claim, depend on the individual facts and documents.