What is a Conditional Fee Agreement?

A Conditional Fee Agreement, or CFA, is a “no win no fee” agreement whereby a solicitor and their client agree to share the costs risks of legal proceedings.  Usually they provide for the solicitor’s legal fees becoming due upon success and will include an uplift to such legal fees.

A Conditional Fee Agreement is an agreement between a lawyer and their client to an arrangement whereby the solicitor’s legal costs incurred WILL NOT be paid by the client in the event the aim or purpose of the lawyer’s instruction, usually defined as “Success”, is not achieved.

However, to balance out this risk, the reward for the solicitor under the Conditional Fee Agreement in achieving the result, or success, is that the Solicitor will become entitled to his/her standard time costs (usually charged on the basis of a hourly rate multiplied by the time spent on the work, referred to as “Time Costs”) PLUS an uplift, or premium, calculated as a % of such Time Costs.

For example, if a solicitor is employed on a Conditional Fee Agreement with a premium of 100% of Time Costs, in the event the instruction leads to a successful outcome then the solicitor will be entitled to 200% of their hourly charges, or fees (plus VAT)

Conventionally, where a claim is brought for recovery of sums clamed as damages (or where the claim is defended), the entire legal costs of bringing or defending that clam are recoverable from the opponent.  This continues to be the case and since the introduction of Conditional Fee Agreements (in the early 1990s) this used to include the premium (or uplift) arising under a Conditional Fee Agreement.

However, since a change of legislation commencing from April 2013, the recovery of the premium payable under a Conditional Fee Agreement as part of any legal costs is no longer recoverable.  The base time costs remain recoverable from the opponent, just not the premium (which the successful client must still pay).

In summary, a Conditional Fee Agreement is a mechanism whereby legal costs are not immediately incurred but are instead paid at a higher rate leveraged by the outcome south, which usually (but not always) comprises litigation proceedings commonly claimed and, occasionally, on a defended basis.

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.

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