Conditional Fee Agreements what you need to know

When you enter into a Conditional Fee Agreement you need to know what legal proceedings it covers, in what circumstances your solicitor’s legal fees are payable and areas of work it covers. Conditional Fee Agreements will generally not cover a barrister’s fees or other disbursements incurred by your solicitor.

A Conditional Fee Agreement if an agreement between a solicitor and his client that the Solicitor’s legal fees (i.e. his and his staff’’s hourly charge out rates multiplied by the time spent on your matter) will only become payable in the event certain conditions are met.  A more detailed explanation can be found here.

You will be provided a guidance note on what you need to consider before signing a Conditional Fee Agreement.

The conditions applicable to a Conditional Fee Agreement normally refer to the outcome of the instruction being a “success” as defined in the agreement.  For litigation, “success” will usually mean that the claim leads to judgment in the claimant’s favour or, for Defendants, that the claim is successfully defended (usually with the claimant being required to pay the Defendant’s legal costs.

There are however a number of very important aspects of a Conditional Fee Agreement that you need to know.

Firstly, it will not apply to expenses incurred by a solicitor (often referred to as disbursements).  These expenses can include anything from courier costs, copying costs and property documents downloaded from the Land Registry.

The most expensive disbursement, however, is the fees charged by your barrister (usually referred to as “Counsel”).  Whilst in certain circumstances they may also agree to enter into a Conditional Fee Agreement, if they do not then their fees will be payable despite the Conditional Fee Agreement applicable to your solicitor’s fees.

The other important aspect that you need to know is the ability to recover the “uplift” or “success fee” that the solicitor becomes entitled to in the event the claim or defence is successful.  For all Conditional Fee Agreements executed after 6 April 2013, for litigation proceedings issued at Court (or for defences) this part of the solicitor’s legal costs is not recoverable from the opponent as a valid legal costs of the proceedings.

Accordingly, upon entering into a Conditional Fee Agreement, the client must be aware that in the event they are successful then they will have to personally pay a sum equal to (or even possibly exceeding) the solicitor’s standard rate charges, such sums being potentially paid out of the judgment itself or otherwise from the client’s own funds.

A Conditional Fee Agreement is very useful to enable you to issue a claim or defend a claim without immediate cost risks, but is nowadays only of any use when the potential successful outcome outweighs the detriment of paying the uplift portion of your solicitor’s legal costs at the end (the alternative being just to pay them from the start but being able to recover such sums from your opponent).

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 on 020 7841 0390.  Alternatively e mail us with your enquiry and we will call you back at a time convenient to you.

Page # of 33