What is a Conditional Fee Agreement (CFA)?Updated: October 4, 2022
A Conditional Fee Agreement (CFA) is a legal funding arrangement where a solicitor getting paid is conditional on a specified outcome, such as winning a case.
CFA's are more commonly referred to as no win, no fee agreements.
See also: No Win, No Fee - Your questions answered
Conditional Fee Agreements take the risk out of making a claim
The majority of personal injury claims are made on a no win, no fee basis. When making a no win, no fee claim, an injured claimant enters into a Conditional Fee Agreement (CFA) with a solicitor.
If your claim is successful
If you win your claim, your solicitor will receive a success fee.
Success fees are calculated as a percentage of your final compensation settlement or award.
Success fees are capped by the Ministry of Justice (MOJ) at a maximum of 25% of your total compensation award. As success fees are deducted from your compensation, you are never out of pocket.
If your claim is not successful
If your work injury claim is unsuccessful, you would not pay any legal fees under a Conditional Fee Agreement.
After the Event Insurance (ATE)
If you don't win your claim, various costs will have been incurred, such as the defendant's legal costs and medical report costs. These costs would be paid by an insurance policy known as ATE Insurance.
ATE Insurance is a counterpart of any Conditional Fee Agreement that makes no win, no fee claims possible.
Sometimes referred to as Legal Expenses Insurance, an ATE Insurance policy would be taken out on your behalf at the start of your claim to cover any costs incurred if you lose your claim.
You do not have to pay for the ATE policy if your claim is unsuccessful.
If your claim is successful, the cost of the ATE policy is deducted from your compensation.
So I could lose 25% of my compensation under a CFA?
Not exactly. In 2013 the law was changed in line with a Court of Appeal review known as the Jackson Reforms.
Since 2013, general damages awarded for pain and suffering and loss of amenity (PSLA) have been increased by 10% for claims funded by a Conditional Fee Agreement. This 10% uplift is applied to partially offset success fees.
If your claim is successful, your general damages compensation is first increased by 10% before the 25% success fee is deducted.
The following example illustrates the difference between a No Win, No Fee claim and one financed through other means (e.g. self-financed, insurance company funded or union-funded).
|Claim funded with a CFA||Amount|
|General damages compensation award||£20,000|
|Total general damages award||£22,000|
|25% solicitor success fee||£5,500|
|Compensation received by claimant||£16,500|
If you were to fund the above example claim yourself, you would have to agree fees with the solicitor.
These fees could be open ended and could end up costing considerably more than 25% of your compensation. You would also have to cover the cost of any other costs and disbursements. You would also have to pay the defendant's costs if you lose.
Most work injury claims are funded with a CFA.
What do I pay if my claim is unsuccessful?
If your claim is not successful you will not have to pay a success fee or any other legal fees. All No Win, No Fee agreements are accompanied by an insurance policy known as ‘After the Event Insurance’ (ATE). ATE insurance covers the other side’s costs and legal fees.
You do not have to pay for the ATE insurance policy if your claim is unsuccessful. If you win your claim, the cost of ATE insurance would be deducted from your compensation.
Do CFA’s vary between solicitors?
As with any legal contract, the devil is in the detail.
Most part, personal injury solicitors enter into the spirit of no win, no fee. Although solicitors are regulated, you should still read the solicitor’s terms and conditions carefully before you sign anything. You should ask the solicitor to address any concerns you have before signing a Conditional Fee Agreement.
In particular, you should check the fine print for fees that may be payable if:
- you refuse an offer that the solicitor advises you to accept
- you decide to settle out of court when the solicitor advises otherwise
- you refuse to co-operate with the solicitor
- the defendant is ordered to pay your costs but is unable to do so
Can I get out of a CFA?
In accordance with The Consumer Contracts Regulations 2013, the CFA should include a 'Notice of the Right to Cancel' giving you the right to cancel within 14 days of the date the contract is entered into. You do not needing to provide a reason for cancellation during this cooling-off period.
However, some solicitors may ask you to sign a separate document authorising them to start work during the 14 day cancellation period. If you agree to this condition, the solicitor may be able to charge you for any work carried out in the initial 14 days if you cancel the CFA in the cooling-off period..
Have you been injured at work?
If you have been injured at work in the last 3 years, you may be able to claim financial compensation.
Find out more about making a work accident claim:
- Do you qualify?
- How much compensation could you get?
- How does No Win, No Fee work?
Read more: Work accident claim guide
Our work injury advisors will:
- Offer free, impartial advice
- Explain how No Win, No Fee works
- Recommend the right solicitor