Starting a legal case can be daunting. Especially when it comes to understanding how you might be able to affordably access justice.
At Lawhive, we stand for everyone. We believe that no matter who you are, you should be able to make a claim and pursue compensation when you have been wronged or subjected to harm as a result of someone else’s negligence. With that in mind, we want to do everything we can to enable individuals to do this.
In this comprehensive guide, we’re going to walk you through Conditional Fee Agreements to help you understand how these types of arrangements may be able to help you access justice, specifically in the case of personal injury, housing disrepair, or employment claims.
We’ll explain, in plain English, what Conditional Fee Agreements are, their advantages and disadvantages, and what should be included within a CFA. We’ll also explore the kinds of cases that may be suitable for these kinds of agreements, and how our specialist solicitors at Lawhive Legal may be able to help you.
Let’s get started…
What is a Conditional Fee Agreement (CFA)?
A Conditional Fee Agreement (CFA) is a deal between you and your solicitor to handle a legal issue. It’s essentially a way to share the risk and make things fair financially. They're sometimes called no win, no fee claims.
Here’s how it works: If your case is successful, meaning you win, you’ll pay your solicitor their regular fee plus a little extra called a success fee.
But if things don’t go your way, and your case isn’t a success, you might only have to pay a reduced fee or, in some cases, no fee at all. What you'll pay depends on what you agreed when starting the CFA.
What is a success fee in Conditional Fee Agreements?
In a Conditional Fee Agreement, a success fee is an additional fee that a client agrees to pay their solicitor if the case is successful. It’s a percentage of the solicitor’s standard fees and is designed to compensate the solicitor for taking on the risk of not being paid if the case is unsuccessful.
The success fee is only payable if the client wins the case, providing an incentive for the solicitor to achieve a positive outcome.
What level of CFA success fee may be payable?
In business cases (excluding personal injury cases under CFAs since April 1st 2013), the success fee can go up to a maximum of 100% of the regular fees.
To decide the success fee, the solicitor looks at how strong your case is, how likely it is to settle, the expected costs, and if it relies a lot on uncertain evidence. They also consider the information available when you start the CFA.
An important point on success fees is that they can’t be a percentage of the money you win or agree upon. It’s more about the risk and complexity of your case, not tying it directly to the amount of damages you might get. So, it’s like a way to fairly calculate extra fees based on how challenging your case is, without making it a cut of the winnings.
Who pays the CFA success fee?
The client is responsible for covering all the fees, including the success fee.
If a CFA was set up before April 1st 2013, you might be able to get some or all of the success fee back from the party you’re up against in court.
However, if the CFA was made after this date (with a few exceptions like insolvency cases until April 5th 2016, defamation cases until April 5th 2019, and mesothelioma cases), the success fee isn’t something you can recover from the other party.
What is payable if the case loses?
If your case doesn’t go your way or the result doesn't meet the set success goals, you might end up paying less, or even nothing, depending on what you agreed on in the CFA. But, and it’s an important but, you still might need to cover other costs like disbursements and expenses.
Also, if you lose the case there’s a good chance you might need to chip in for the other side’s reasonable and fair costs, too.
Do you have to tell the other side about a CFA?
For Conditional Fee Agreements made after March 31 2013, you don’t have to tell the other side about the agreement.
However, if your CFA was made before this date, you should’ve given them a heads-up in a specific way. If you missed that, it could impact your ability to recover the success fee from them.
In the event you do have to notify your opponent, the info you share is pretty limited, and you definitely shouldn’t tell them any details without talking to your solicitor first.
What are the advantages of a CFA?
When you team up with a solicitor through a CFA, there are a few advantages:
Access to legal representation without the need to pay upfront fees, making legal services more accessible for those who may not have the financial means to cover the costs of litigation;
Risks of litigation are shared with the solicitor, encouraging them to carefully assess the strength of a case before taking it on;
Clients only pay legal fees if they win the case. Therefore, both the solicitor and client are motivated to achieve a successful outcome.
What are the disadvantages of a CFA?
When you enter into a CFA, there are a couple of things to keep in mind:
In the event of a successful outcome, clients have to pay a success fee in addition to regular legal fees. This success fee is often a percentage of the solicitor’s standard fees and is intended to compensate for the risk taken by the solicitor in handling the case;
Clients may still be required to contribute to certain costs, such as disbursements and expenses, even if the case is unsuccessful;
Following changes introduced in April 2013, success fees under CFAs aren’t generally recoverable from the losing party. This means that even if you win your case, you may need to cover the success fee yourself.
Specific terms and conditions of CFAs vary. Individuals should carefully review and discuss these terms with their solicitors before entering into such an agreement to make an informed decision.
What should be included in a CFA?
A CFA is a legal contract between a solicitor and a client outlining the terms of their arrangement. A comprehensive CFA should typically:
State who the parties to the agreement are (i.e. client and solicitor);
Define the scope of legal services to be provided by the solicitor, such as the nature of the case, the legal tasks involved, and any limitations on the scope of representation;
Clearly outline the criteria that define a successful outcome for the case to determine when the success fee becomes payable;
Specify the solicitor’s standard fees for services and clearly state the percentage or method used to calculate the success fee, as well as when and how fees will be payable;
Detail how disbursements (additional costs such as court fees or expert witness fees) and other expenses will be handled, whether by the client or the solicitor;
Outline the circumstances under which either party can terminate this agreement and any associated consequences;
Clarify how costs will be handled in the event of a loss - whether the client will be responsible for any costs and, if so, the extent of this responsibility;
If relevant, information about any After the Event (ATE) insurance arrangements, which may cover the client’s liability for the opponent’s legal costs in case of an unsuccessful outcome;
Address the confidentiality of information exchanged between the client and solicitor during legal proceedings;
Outline any obligations or responsibilities the client has under the agreement, such as providing necessary information or cooperating with the solicitor.
It’s really important for both parties to thoroughly understand and agree to the terms outlined in a CFA before agreeing to it.
What kind of claims can be funded through a Conditional Fee Agreement?
CFAs can be used to fund various types of legal claims, providing a flexible arrangement for clients seeking legal representation. Types of claims that could be funded through a CFA include, but are not limited to:
Personal injury claims
Employment claims
Professional negligence claims
Commercial disputes
Criminal injury claims
Public law claims
Defamation and privacy cases
Housing disputes
Whether or not a CFA is appropriate depends on the specific circumstances of each case.
Who might be eligible for a CFA?
As a general rule, solicitors will only take on CFA cases that have a good chance of success. This is because, in entering into this type of agreement, they take most of the financial risks.
As such, they’ll look carefully at the details of your case and use these details to decide whether a Conditional Fee Agreement might be suitable.
What is After The Event Insurance (ATE)?
After the Event insurance is a legal insurance policy that a client can take out after a legal dispute has arisen and they are considering pursuing the case under a Conditional Fee Agreement.
This insurance covers the client against the risk of having to pay the opponent’s legal costs if their case is unsuccessful. In other words, if a case loses and you (the client) have taken out After the Event insurance, this insurance will cover your opponent's legal costs in full.
Advantages of ATE insurance
Protects clients from the financial risk of having to pay the opponent’s legal costs if the case is lost;
May also cover disbursements such as court fees and expert witness costs
Considerations of ATE Insurance
The client typically pays a premium for this insurance, but this is often deferred (put off) until the end of the case. If the case is successful, the premium may be recoverable from the insurer;
ATE is specific to the particular legal case, covering the risks associated with that specific matter.
In short, ATE insurance is a protective measure clients may consider when pursuing legal cases under a CFA to help them manage the financial risks associated with litigation, particularly if the case is not successful.
Conditional fee agreements from Lawhive
At Lawhive, we stand for justice for all. Therefore, in some cases, we can offer conditional fee agreements to help you seek justice and reduce the financial risk of making a claim.
Under a CFA with Lawhive Legal, our solicitors will work with you to get the most favourable outcome for your case and help increase your chances of being fairly compensated for any damages. For more information, contact us today and tell us about your case.
All claims cases are handled by Lawhive Legal Ltd, a fully SRA-regulated law firm. Our commitment is to provide professional legal services in compliance with the Solicitors Regulation Authority (SRA) guidelines. If you have any questions or concerns about a claim, please do not hesitate to contact us. Your satisfaction and understanding of the legal process are important to us