Read here for the recent changes in the legislation to do with conditional fee agreements. Whatever you funding question - we can find the right solution for your case
The new model conditional fee agreement came into force on 1 April 2013.
- these agreements are subject to Conditional Fees Order 2013, which comprises supplementary regulations to the legislation that has been in force since the early 1990s permitting conditional fee agreements;
- the Courts and Legal Services Act 1990 brought in the idea of a conditional fee agreement, or CFA, which is an agreement where the solicitor’s legal fees are conditional upon certain circumstances occurring, namely that their client is successful in either their claim or their defence.
In exchange for entering into a CFA, the solicitor (who has taken the risk that his/her fees are dependent on the strength of their client’s case) will be able to claim an uplift on such fees payable if their client’s case is successful.
The principle came into great use with the solicitor’s fees (including the “uplift” on their rates, often up to 100%) became wholly recoverable as a legal cost against their client’s opponent. This provided access to justice for those with strong claims or defences but who would not otherwise be able to afford to pay the associated legal costs.
- however, with time, the effect of these arrangements were not all positive and circumstances began to occur whether the legal fees under the CFA outweighed the sum claimed or the size of the proceedings.
- from 6 April 2013, these regulations changed with the advent of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”) which took effect from the beginning of April 2013.
Following these changes, and the commencement of LASPO, subject to some exceptions (for example claims by liquidators or administrators) the uplift on a solicitor’s legal costs available under a CFA is no longer recoverable from the opponent and is therefore payable by the client.
- for defendants, this now meant there was no point to the CFA as they would have to pay their solicitor’s standard rate fees with or without this agreement.
- for claimants, whilst this still would provide some limited benefit, it would mean that any judgment obtained would be reduced by the uplift part attributable to the solicitor’s fees under the CFA.
Equally, there is no benefit from a solicitor’s point of view in taking the risk of a CFA unless the client is prepared to pay the uplift as a cost of successfully defending or prosecuting their claim. For some defendants, for examples directors subject to a disqualification claim, the CFA uplift may be a cost they are willing to meet as a result of being able to continuing acting as a director.
However, LASPO did bring in changes to the civil procedure rules to provide benefits to claimants and permit legal funding arrangements by way of sums recoverable under a damages based agreement – which is an agreement to share in the recovery from claims for damages – damages based agreements.
At Francis Wilks & Jones we are extremely familiar with all types of funding models and will seriously consider entering into a CFA, subject to a risk assessment. We can also discuss alternative forms of litigation funding applicable to your situation.
Please call any member of our commercial litigation team for your consultation now. Alternatively e mail us with your enquiry and we will call you back at a time convenient to you.