Solicitor hardship applications: difficulty or delay in recovering from the applicant

The regulation states:

16 (3) The Board may authorise that the requirement created by section 12 (3) (c) of the Act that, before recourse to the Fund, fees or outlays shall be paid to the solicitor out of any property which is recovered or preserved for the client shall not apply in relation to the whole or any part of any such property in any case where an application by the solicitor the Board are satisfied that –

(b) (i) the solicitor has taken all reasonable steps to obtain payment out of the property to which the requirement would otherwise apply; and

    (ii) payment to the solicitor out of that property could only be effected with unreasonable difficulty or after unreasonable delay.

You should make this application if you have taken all reasonable steps to obtain payment of your account without success or there will be an unreasonable delay before payment can be made.

To make an application under Regulation 16 (3) (b), you should use the online form through Legal Aid Online.

Please see – How to submit a hardship application (video)

• You should have taken all reasonable steps to get payment if a recovery has been made.
• You must show you cannot be paid without unreasonable delay or difficulty.

You should have taken all reasonable steps possible to recover the fee and give us details of these. If legal action has not been taken, you should explain why. There is not a requirement to take legal action, but you should be able to say why no such action was taken. You should provide:

• Information to show there are no prospects for recovery
• Details of how and when the fee was intimated to the applicant
• Information about any correspondence you have entered into with the applicant to get payment.

We cannot give prescriptive or definitive guidance about the steps you should take, as we have to consider each case on its own merits. However, one factor we have to consider is the cost-benefit analysis of any potential steps to recover the fee.

Example 1: You have been unable to trace the client through tracing agents and have no bank information to place an arrestment. It is likely that we will grant the application in these circumstances.

Example 2: Client’s financial position indicates that any legal proceedings would be unsuccessful as the client is on low income or is in receipt of benefit and does not own any property. It is likely that we will grant the application in these circumstances.

The amount of the account and steps we will expect to be taken

In many cases where the solicitor’s account is small (under £100), we would accept a letter showing that you have written to your client seeking payment of your account, but they have not replied, a reminder and evidence of return of post from the last known address.

You should also consider requesting payment by recorded delivery letter and provide proof of this.

For accounts over £100, we would expect to see evidence as above and a clear explanation of why it is not possible or practical to take legal action.

Steps we expect where you do not know the settlement terms or no longer act for the client

If your account is small (under £100) and you have not received any instructions from the client, we would accept a letter and reminder showing that you have written to the client seeking an update but no reply has been received, or evidence of return of post from the last known address.

For any other accounts we think it reasonable to expect to see evidence of more substantial steps having been taken such as two letters being sent to the client seeking information regarding settlement with one being sent by recorded delivery. Letters to the opponent or opponent’s solicitor seeking an update should also be considered.

Once you have undertaken the above and you are still unaware of the recovery position, you should submit your account to the Board for it to be assessed. No hardship application is required in these circumstances as you are not aware of a recovery being made.

Actions we may pay for to enable you to recover the fee

We will pay you for sending a letter to your client seeking specific information about settlement or progression of the case in order to find out whether property has been recovered or preserved. The letter should be of a reasonable length and be no more than one sheet. We will also pay for a letter to the opponent and opponent’s solicitor.

If you do not receive a reply to this letter we will also pay you for issuing a final reminder letter before you decide to close your file. Again this letter should be no more than one sheet and will be paid at the formal rate.

Two aspects can lead to difficulty in recovering any property or expenses:

• The nature of the property
• The time it may take to recover some property

Difficulties in recovery: the nature of the property

You should look at how much the applicant would receive if they sold the property and the personal importance of the property to them if they were to keep it.

You should not expect your client to sell the property if the item does not have reasonable monetary worth or if it would be difficult to sell.

Example 1: If the applicant is successful in recovering items such as a mobile phone and their clothes which were kept by a previous partner, the items have a minimal value second hand and you should not expect the client to sell these to make payment of the fee.

Example 2: If the applicant is successful in recovering items such as jewellery, cars and paintings which were kept by a previous partner, these items could have significant value and so you would expect the applicant to sell the items to pay your fee. You could agree with the client to repay the sum due by instalments so they did not have to sell the items.

Difficulties in recovery: the time it may take to recover the property

If the applicant is unable to make payment of your account in a lump sum we would expect you to seek payment by way of instalments.

You must show that you have sought payment of your account from your client

• For any cases where instalments can be made, we can only consider an application if payment has not been paid in full within 12 months.
• If the applicant is not in a position to pay you any instalments, you must provide details as to how you came to that decision and clarify that you obtained verification of your client’s income and outstanding debts to show they cannot afford to pay instalments.

For example:

If the property recovered is the applicant’s dwelling we would expect you to seek payment of your account by instalments. If the timescale is not reasonable you can submit an application under Regulation 16 3 (b). This must be supported by evidence that you assessed your client’s financial circumstances to show that if they paid your account by instalments it would cause unreasonable delay.

If the recovery is a property that is not your client’s dwelling, you should expect the property to be sold to allow payment of your account to be made or for the applicant to raise/borrow funds against the property to make payment of your account.

If the recovery involves a pension, and the policyholder is within one year of pensionable age at the time of settlement, we consider it is reasonable for you to await the payment of the pension.

Where the parties are young at the time of the agreement and you will have to wait more than one year before the pension is payable, this would constitute unreasonable delay or difficulty.

Where a pension is paid by instalments and not by a lump sum, it may not be reasonable to expect you to wait for payment.

Where an investment, such as a bond, would not otherwise be encashed for four years, the applicant is accruing interest and therefore gaining advantage at the expense of the Fund. Normally, the only hardship to the client is that they would incur some form of penalty by loss of interest and we will refuse the application. However, we will consider the type of investment, any arrangements for surrender and the likelihood of capital being lost.