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Conditional fee agreements (CFAs)

01 April 2008

Since the government's acceptance of conditional fee agreements (CFA) in the 1990s, there has been a rise in the number of CFAs being entered into by clients and law firms.

A CFA is an agreement with a solicitor that provides for his or her fees and expenses, to be paid only in certain circumstances i.e. usually only if the client wins the case.

For example, if an individual client with limited funds has a very good claim against his accountants for professional negligence then they may wish to consider entering into a CFA with a firm of solicitors.

Key characteristics of CFAs:-

• A success fee will be included in the CFA, which is an additional amount payable for the legal services over and above the amount which would normally be payable if there was no CFA i.e. a percentage uplift which does not exceed 100%. It is based on the risk of you losing the litigation and the cost to the law firm of not being paid the conditional fees until the outcome of your case is known.

• CFAs are not available for criminal and matrimonial proceedings.

• Depending on the terms of the CFA, liability for the legal costs of your solicitor will usually be significantly lower i.e. if you win, the opposing party will usually have to pay a significant part of your costs (in the usual way) and if you lose you will not have to pay those costs which are conditional.

• If you lose the case it is likely that you will be ordered to pay a significant part of your opponent's costs. However, you can take out after-the-event insurance to cover this potential liability, which means that you will only have to pay the insurance premium and excess.

• At the outset of your case it is likely that there will be a full review of your key documentation, possibly with obtaining evidence from key witnesses, before a decision is made whether to offer you a conditional fee agreement.

If you wish your claim to be considered by our litigation and dispute resolution practice for suitability for a conditional fee agreement, please contact them on 01753 279037 or by emailing disputes@bpcollins.co.uk.