Conditional Fee Agreement
What is a Conditional Fee Agreement ?
Conditional Fee Agreements were introduced back in 1998, as an answer for members of society who couldn’t afford legal representation themselves due to the high costs of litigation in the UK.
More recently In April 2013 Conditional Fee Agreements had to adapt to new UK legislation following the LASPO Act.
However the overriding principle of CFA’s were still needed by society, and the no win no fee arrangement of your legal representative (solicitor) only getting paid in the event of a win remains in tact.
How does a Conditional Fee Agreement operate?
Conditional Fee Agreements are a funding arrangement whereby you only pay for legal representatives work on the condition that your legal case is won, and you get damages awarded. So if you lose your legal case, you don’t have to pay your legal representative fees.
Some costs can be recovered from the losing side (fixed costs), but the legal representatives success fee can no longer be, following the changes to Conditional Fee Agreements implemented in April 2013.
This success fee is now deducted from your damages once your legal representative is paid.
Prior to entering the CFA with your legal representative, the details of your Conditional Fee Agreement will be outlined by your legal representative in detail. It is at this stage that a success fee percentage is agreed. This fee can vary, but is likely to be in the region of 25% of your damages.
What if my legal case is won?
The agreed damages and costs / expenses are paid to your legal representative.
Some of the time, the losing defendant pays back costs and disbursements incurred through your legal representative and LEI insurance may also cover any difference.
Disbursements (expenses) refer to whatever your legal representative pays out to another third party for help with your legal case, such as:
Medical records cost
Once the success fee and any other unrecovered disbursements are paid to your legal representative, the remaining damages (money) will be sent to you as your compensation.
And what happens if I lose the legal action?
You will no longer be required to pay your legal representative any success fee. And you will also no longer be required to pay any of your opponent's costs or expenses as you are protected from these by law, (LASPO Act) except in rare occasions such as:
Your behaviour in the course of the legal case is judged as dishonest. (Fundamentally dishonest)
You had no reasonable grounds to make a claim.
It is discovered that you're only claiming to financially advantage somebody else.
You may still need to reimburse any disbursement & expenses incurred via your legal representative in the course of the legal case, subject to the conditions of your Conditional Fee Agreement. However such disbursements may be recoverable through an insurance policy called an ATE, After the Event policy.
What if the damages award is too low to cover my legal cost?
Any deduction from your damages is capped at 25% in personal injury cases, although this can be higher in other types of case. In many Conditional Fee Arrangements, if the damages awarded are not sufficient to cover your legal representative costs and any disbursements owed, they may not request the balance from you and will write it off.
What if I win but the opponent doesn't want to pay or can’t pay?
Your legal representative has the ability to take action for payment of damages in your name. This is known as enforcing the judgment, and can take many different forms, such as appointing bailiffs, taking money from the defendant’s employer or business, to applying for their insolvency.