Conditional fee agreements

Conditional fee agreements (CFAs) are agreements between a client and lawyer which mean that you pay us less (or nothing, depending on what is agreed) if you lose a case, but a full fee if you win.

They are sometimes called "no-win, no-fee" agreements, though we prefer the client to take at least part of the risk - for example, paying half normal fees in any event but full fees, and depending on circumstances a success fee on the balance at risk if you win.

CFAs are a similar concept to "contingency fees" used in other jurisdictions. Those however involve taking a slice of the damages if one is successful. They are not presently used in the UK although a similar model, "Damages Based Agreements" are now permitted.  However, they would not normally apply in public law work because damages are not usually recovered in such cases.

If you win, you can usually recover most of your costs from the other side.  However, with effect from 1 April 2013 the rules have changed so that you cannot recover the uplift and cost of insurance you may have taken out to cover the costs in the event of losing ("After The Event" or ATE insurance).

CFAs must be in writing and the agreement must deal with various specific points, as laid down in regulations. A potentially difficult issue is how to decide what "success" means.  Like an elephant, success can be hard to describe but easy to recognise.  In practice it will usually be a situation where costs are ordered to be paid by the other side.  Most litigation we do is against government and other public bodies, so one does not usually run into the problem of the other side being unable to pay costs.

Counsel may agree also to work on a conditional basis but experts cannot do so. Usually we expect the client to pay for disbursements such as expert's fees, court fees, etc., but again this can be discussed. Overall, when considering whether to enter a CFA, one has to strike a balance between what makes sense for us and the client, what the client can afford, and the need for the client to have a stake in the matter.

It is also important candidly to recognise that a CFA means that because the lawyers have a financial interest in the outcome of a case, they have to have a substantial say in how it is handled and indeed whether it continues or not (or, for example, whether a court's decision is appealed). In our experience the advantages for the client of working on a full or even part CFA outweigh this disadvantage. Any potential problems can be dealt with by cooperative discussion with the client. However, in contrast to the normal situation of "he who pays the piper calls the tune", clients must realise that - as long as the CFA agreement continues - they cannot fully control the running of a case. This is not in practice a problem, but it is something important to appreciate.