What is a Conditional Fee Agreement (CFA)?Updated: October 15, 2020
A 'Conditional Fee Agreement (CFA)' is a legal funding arrangement where your solicitor is paid conditionally on a specified outcome, such as winning your case. Conditional fee agreements are more commonly referred to as ‘No win no fee agreements’.
CFA's take the risk out of making a claim
If your work injury claim is unsuccessful, you would not have to pay any legal fees under a No Win, No Fee agreement.
If you win your claim your solicitor would receive a ‘success fee'. Success fees are calculated as a percentage of your final settlement or award. Since the enactment of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), success fees can no longer be recovered from the defendant.
Success fees are capped by the Ministry of Justice at a maximum of 25% of your total compensation award. As success fees are deducted from your compensation, you are never out of pocket.
Your solicitor is able to work on a No Win, No Fee basis because they will take out legal expenses insurance at the start of your claim to cover any such costs. You will not have to pay for the cost of this insurance policy if your claim is not successful. If the claim is successful, the cost of the policy will be deducted from the total award.
Under a CFA you may also be liable for certain other costs, including legal expenses insurance, court fees or medical assessments. Although legal expenses insurance cannot be recovered from the defendant, your other legal costs will be recovered where possible.
So I could lose up to 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 1 April 2013, general damages for pain and suffering and loss of amenity has been increased by 10% for claims funded through a No Win, No Fee agreement. This 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).
|Funded with No Win, No Fee agreement||Funded through other means|
|General damages compensation award||£20,000||£20,000|
|Total general damages award||£22,000||£20,000|
|Solicitor success fee @ 25%||£5,500||£5.000|
|Total compensation received by claimant||£16,500||£15,000|
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.
For the most part, personal injury solicitors enter into the perceived letter and spirit of No Win, No Fee. Although No Win, No Fee agreements and success fees 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 you sign anything.
In particular, you should check the small 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 our costs but is unable to do so
Can I get out of a CFA?
In accordance with the distance selling act, the CFA should include a "Notice of the Right to Cancel" which gives you the right to cancel within 14 days without needing to provide a reason.
However, some solicitors may also ask you to sign a 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 they do during the initial 14 days.
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?