What is a Conditional Fee Agreement? (CFA)
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With a Conditional Fee Agreement (CFA), you don't have to pay a penny for legal costs if your claim is unsuccessful.
The old 'no win no fee' system came to an end in April 2013 but a modern CFA at Spencers Solicitors works in a very similar way - scan through this guide to find out more.
What is a Conditional Fee Agreement?
Conditional Fee Agreements were introduced in 1998, as a solution for those without the means to afford legal representation.
In April 2013 CFAs needed to adapt to new UK legislation but their reason for existing didn't change at all, so your solicitor still only gets paid if your case is won.
How does a Conditional Fee Arrangement work?
Conditional Fee Agreements is a legal funding arrangement where you only pay for your lawyers work on the condition that your case is won and you receive compensation. So if your claim is unsuccessful you're not left with a bill for legal work.
Depending on the type of case, some legal costs and expenses can be recovered from the losing party at the end of the claim. However the changes to conditional fee agreements implemented in April 2013 mean that the 'success fee' element of legal costs can no longer be recovered, so this is payable via a deduction from of your compensation (your damages).
Prior to officially instructing your lawyer, the details of your Conditional Fee Agreement will be clearly outlined. It is at this stage where a 'success fee' percentage is also agreed upon. While the exact success fee amount will be unknown at the start of the case, in personal injury claims, no deduction can be more than 25% of your total damages payment.
What happens if the case is won?
The agreed legal costs are paid to your solicitor, along with the 'success fee'.
Most of the time, the losing party will pay back any disbursements (expenses) incurred by your solicitor and legal expense insurance may cover any difference. Disbursements refer to anything your solicitor pays out to another party in support of your case, such as:
- Barrister fees to attend court
- Cost medical report by a GP or consultant
- Accident report costs
- Travelling expenses
Once the success fee and any unrecovered disbursements are paid, the amount remaining from your compensation payout is entirely yours.
What happens if the case is lost?
You will not be required to pay your solicitor any legal costs. You will also not be required to pay any of your opponent's legal costs or expenses, unless in exceptional circumstances the court determines that:
- You had no reasonable grounds to make a claim in the first place
- The claim was an exploitation of the court and its procedures
- Your general behaviour during the case is judged as dishonest
- It is discovered that you're only claiming to financially benefit somebody else
You may still need to reimburse any expenses incurred by your solicitor during the case, subject to the conditions of your CFA. However such disbursements may be recoverable through a legal expense insurance policy.
What if the payout is too small to cover my legal costs?
Any deduction from your compensation amount is capped at 25%. Also under our Conditional Fee Arrangement, if the damages you receive are not adequate enough to cover our basic charges and any owed disbursements, we will not request the balance from you.
What if I win but the opponent doesn't pay?
Your lawyer has the legal right to take action for payment recovery in your name. At Spencers our intention would be to put a judgment, order or agreement into effect that ensures your owed compensation is recovered and paid in full. The charges for this service are an inclusive part of the basic legal costs.
How did no win no fee claims work previously?
Your solicitor used to be paid in full by the opponent at fault and this amount was completely separate from your compensation payout, but this system was prevented from April 2013.
Why have Conditional Fee Agreements changed?
The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012, was officially enacted in April 2013. Due to the parameters within this new legislation, solicitors can no longer recover all costs from the defending party.
However a more positive aspect of the LASPO Act was to implement a 10% increase in the amount of compensation injured people receive from April 2013. This is designed to partially offset the additional legal fees claimants are now faced with.
Sample Conditional Fee Agreement
At Spencers each CFA is drafted based on the type of accident and severity of injury, which can only be done after initial discussions with a specialist lawyer. However the Law Society have produced a conditional fee agreement template that you can view and will give you an idea of what the agreement may look like.
Why should I consider entering a modern CFA?
There are three key benefits to entering a CFA with an established law firm like Spencers Solicitors:
- We share the risks and costs of legal proceedings with our clients
- If the case is lost, our clients don't need to pay for our legal fees
- If the case is won, all fees are effectively covered by the compensation payout
What is a Collective Conditional Fee Agreement?
A Collective Conditional Fee Agreement, or CCFA, is very similar to an individual CFA however is usually taken out by an organisation (insurance company, trade union etc.) on behalf of multiple clients. Whilst this type of funding arrangement is between the organisation and the solicitor, the solicitor still acts for the individual client and the client will benefit from the terms of the CCFA which will usually be on the basis that if the claim is lost the client will not be liable for any of their own solicitor's fees.
A Conditional Fee Arrangement
In conclusion, Conditional Fee Agreements are still 'no win no fee' and offer a risk free route for pursuing the justice you deserve following an injury. To find out even more about our Conditional Fee Arrangements, get in touch today on 08000 93 00 94.
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