Funding, costs information and client care — SQE1 Legal services question
A worked single-best-answer question on funding, costs information and client care, with why each wrong option is wrong — the way SQE1 traps candidates.
Nina has been dismissed and wants to bring an unfair dismissal and discrimination claim in the employment tribunal. She cannot afford to pay hourly fees. Her solicitor proposes a damages-based agreement under which the firm will receive a percentage of any sums she recovers and nothing if she recovers nothing. Nina asks what the maximum percentage the firm can lawfully take will be.
Which of the following best describes the maximum payment the firm can receive under the agreement?
- A35% of the sums ultimately recovered by Nina, including VAT.
- B25% of the sums recovered, including VAT, because the claim includes a claim for injury to feelings.
- C50% of the sums recovered, including VAT, because that is the general cap for damages-based agreements.
- D35% of the sums recovered, with VAT payable on top.
- EThere is no cap, because damages-based agreements are unregulated in tribunal proceedings.
Show answer and reasoning
Rule: A damages-based agreement in an employment matter may not provide for payment exceeding 35% of sums recovered, inclusive of VAT.
- B The 25% cap applies to personal injury claims, not to employment matters. (right rule, wrong facts)
- C The 50% cap applies to other civil claims; employment matters have a specific 35% cap. (wrong rule)
- D The cap is inclusive of VAT. (wrong rule)
- E Damages-based agreements in employment matters are regulated by the 2013 Regulations, which impose a 35% cap. (wrong rule)
Source: Courts and Legal Services Act 1990, s 58AA; Damages-Based Agreements Regulations 2013, SI 2013/609, regs 4 and 7