At the start of this month Civil Litigation Reforms came into force regarding success fees contained within CFA’s.
What is a CFA?
Conditional Fee Agreement
The Court and Legal Services Act 1990 defines a CFA as:
“An agreement with a person for advocacy and litigation services which provides for his fees and expenses, or any part of them, to be payable only in specified circumstances”.
In simple terms the amount a client pays his solicitor will vary depending on the result of a case:
If a client looses a case he/she will not have to pay anything (i.e. ‘conditional fees’) referred to in the CFA.
If a client wins a case he/she will be liable to pay all the costs of the case (in particular those as detailed in the CFA), which may include a success fee if this has been included in a CFA.
What is meant by ‘Success Fee’?
The Court and Legal Services Act 1990 s58(2) provides a somewhat long winded definition of a success fee, so again in simple terms:
A success fee represents an amount payable at the conclusion of a case which is more than what a client would pay if there was no CFA in place.
This amount becomes payable only in certain pre-determined circumstances (commonly where a client wins a case).
In personal injury cases the success fee is capped at 25% of compensation recovered at first instance.
Elimination of recoverability of success fees
CFA’s entered into after 1st April 2013
With regards to CFA’s entered into after 1st April 2013 it is no longer possible to recover success fees from the opponent in the case, the success fee is now payable by the client. There are however a few exceptions to this:
- This does not apply to CFA’s entered into before 1st April 2013.
- If a Court decides that a CFA is invalid, the client has no liability to pay the success fee or any of the fees defined in a CFA.
Success fees are also still recoverable in the following types of cases:
- Claims for compensation relating to mesothelioma (a form of cancer commonly caused by exposure to asbestos dust).
- Insolvency proceedings.
- Privacy and publication proceedings.
Legal professionals will commonly carry out risk assessments on the prospects of the success of a case before deciding whether a CFA is suitable. The law states a success fee must be reasonable, the Solicitors Act 1974 allows a client to apply to the court to assess the success fee if a client is not happy with it.The law further requires solicitors to always act within the best interests of a client and provide clear and comprehensive information regarding the funding of cases.
Lawdit offer a friendly personalised service at competitive rates, need advice or want to know if a CFA may be suitable for your case? Contact us at firstname.lastname@example.org
By Rehana Ali, a paralegal at Lawdit that can be contacted at email@example.com