Legal Aid Statutory Charge

If this is a matter whereby the opponent is successful in their application the court may order you to pay costs. Your liability to costs will be limited to the amount of any contribution that you are ordered to pay in respect of the grant of Legal Aid Agency (“LAA”) Funding to you and to the provisions of the Legal Aid Agency Statutory Charge.  The exception to this rule is in the remote event that the Court orders you, as a legally assisted person, to meet your opponent’s costs.  That is a very remote scenario.

It may be that there will be no costs payable by you in respect of the matter. The reason for this is that, if you are successful, it may be that you will be entitled to payment of your costs by some other party, i.e. the person whom you are suing, or the person who is suing you.

If our costs are paid in full by the other party, then it may well be that the Statutory Charge will not arise and any contribution that you have had to make towards LAA Funding will be returned to you by the LAA. However, it is rare for the system of “taxation”of costs, as it is known, to result in the other party having to pay anything like the full amount of your costs. There may therefore be a shortfall which we will have to claim against the LAA and, in that instance, the Statutory Charge may arise and your contribution towards the costs may not be returned to you.

It is important for you to appreciate that, having been granted Legal Aid Funding, this does not necessarily mean to say that you will have nothing to pay or that you will only have to pay the LAA Funding contribution. This is because of the LAA “Statutory Charge”.

What this means is that if the LAA consider that you have “recovered or preserved” as a result of the proceedings in which you were legally aided, then they can recover this firm’s costs from you (after the bill has been checked [“taxed”] by the Court) by one of the following means:-

1.  By deducting the costs from any cash which you may receive by way of a lump sum or other payment. No costs are taken from maintenance which you are awarded.

2.  By charging the costs against any house in which you recover or preserve an interest. This means to say that the LAA would have the equivalent of a second mortgage on your house; although they would not normally expect to have the money repaid until the house is sold. If you want to sell the house whilst it is still needed by you as a home, then it may be that the LAA would also agree to transfer the charge to the new property.

3.  By charging the costs against any other property or capital which you may recover. In this case, the LAA might insist that the property or capital assets be sold to pay the costs.

If the LAA retains a charge on property which you recover (as at 2. above), they will want you to pay interest on that charge. If you do not agree to pay interest, then the LAA will want the money from you immediately.

You would be entitled to repay that charge by monthly instalments but the LAA set a minimum monthly repayment figure.

In any proposals put forward for settlement, we will ensure that you understand how the Statutory Charge will affect the money, property or other capital which you recover.

It is possible that an Order for costs might be made against your opponent. If that Order is made and is paid by your opponent, then the amount to be paid by you or charged on your property would be reduced accordingly.

It is also possible that if you are unsuccessful in your application, the Court may order you to pay your opponent’s costs although you are LAA Funded. Such Orders are normally made in terms that they cannot be enforced without leave of the Court. This means to say that the Court would have to be satisfied that you were in a position to pay before they would enforce any Order made.

You must also bear in mind the fact that even though an Order for costs may be made against your opponent, your opponent may not be capable of paying what they have been ordered to pay.

Similarly, if your opponent is LAA Funded, you may not be able to recover any Order for costs, even if you are successful in both the application and obtaining the Order for costs.

Once you have been granted LAA Funding, you have a duty to disclose any change in your circumstances, including any change of address or financial means. If there is an increase in your financial means during the time you are in receipt of LAA Funding, this may affect the amount of the contribution you have to pay towards the costs of the case. As soon as there is a change in your circumstances, you should inform us in order that we may pass that information to the LAA.  Further details of the duties upon you are shown on the reverse of the LAA Funding Certificate which will be sent to you if your application is granted.  If for any reason your LAA Funding is discharged (and we will advise you if any circumstances arise that may result in that), then the LAA will meet the costs incurred on your behalf up to the date of discharge, subject to any contribution that you may have to pay towards your LAA funding.

If you are granted an Emergency LAA Funding and your Certificate is later revoked because, for example, an assessment has been made and it is found that you do not qualify for LAA Funding or you have failed to provide the Legal Aid Agency with information they have requested, you may be required to pay some or all of the costs incurred in preparing your case up to the date your Certificate is revoked.

Similarly, if you unreasonably refuse to accept advice, we have a duty to report that refusal to the LAA, which may result in your Certificate being revoked and the financial consequences outlined above falling upon you.  Therefore, the difference between the LAA Funding being discharged and being revoked is that if the LAA Funding is discharged the Legal Aid Agency will meet your costs, subject to any contribution payable by you or any Statutory Charge.  If the LAA Funding is revoked, then the LAA will meet our own costs, but they may seek to recover those from you.

In respect of Legal Help the statutory charge will only apply if property is recovered the case is exceptional and escapes the relevant Standard Fee. If so, only costs in excess of the level necessary to escape the Standard Fee are taken into account.

If you are ordered to pay a contribution or if the LAA Statutory Charge applies, at the conclusion of proceedings, you will be entitled to be heard upon the taxation of our costs should taxation be necessary. We shall advise you further regarding this in due course.

For more information, please see the Legal Aid Agency’s Booklet entitled: Paying for your Civil Legal Aid.  A copy can be found at this link.

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