Conditional Fee Agreement Civil Procedure Rules: What You Need to Know
If you are a legal professional, you may have come across the term «Conditional Fee Agreement» or CFA. In essence, a CFA is an agreement between a client and a lawyer where the lawyer`s fees will be conditional on the outcome of the case. If the client loses the case, then the lawyer will not receive any fees. However, if the client wins the case, then the lawyer will receive an agreed percentage of the compensation awarded.
CFAs have become increasingly popular in recent years, particularly in personal injury cases, as they allow clients to pursue legal action without the risk of incurring large legal fees. The Civil Procedure Rules (CPR) govern the use of CFAs in England and Wales, and it is essential to understand the rules if you are involved in a case that uses a CFA.
What are the Requirements for a Valid CFA?
The CPR sets out several requirements that must be met for a CFA to be valid. Firstly, the agreement must be in writing and signed by both the client and the lawyer. It must also specify the circumstances in which the lawyer`s fees will be payable, including the amount of the success fee.
The success fee is the percentage of the lawyer`s fees that will be payable if the client wins the case. The CPR limits the success fee to a maximum of 100% of the lawyer`s fees, and the percentage must be reasonable in light of the risk involved in the case.
The CFA must also contain a statement outlining the client`s liability for the lawyer`s fees if the case is unsuccessful. This is known as the «Basic Charges,» and it must be set out in a clear and understandable way.
What Happens if the Case is Lost?
If the case is unsuccessful, then the client will not be liable for the lawyer`s fees. However, the client may still be liable for other costs, such as court fees, expert fees, and the other side`s legal fees.
Under the CPR, the success fee can be recovered from the other side if the case is successful. However, the success fee cannot exceed the percentage agreed in the CFA, and it must be reasonable in light of the risk involved in the case.
Conclusion
CFAs can be an effective way for clients to pursue legal action without the risk of incurring large legal fees. However, it is essential to understand the CPR`s requirements and limitations to ensure that the CFA is valid and enforceable.
As a legal professional, it is your responsibility to ensure that your clients are fully informed about the implications of using a CFA and that the CFA complies with the CPR. By doing so, you can help your clients pursue legal action with confidence, knowing that they will not be liable for legal fees if the case is unsuccessful.