What is a Conditional Fee Agreement?
A Conditional Fee Agreement (“CFA”) enables us to take on your case on a “No Win, No Fee” basis this means we will not charge you anything if you lose the case. We will take your claim on if we think we can win the case
How does a Conditional Fee Agreement work?
At the outset of your case, or as soon as we are able to do so, we will let you know whether we feel able to undertake your claim on a CFA. We will need to consider if there are other ways in which your claim can be funded (more of that later). If not, then we will weigh up your case and the risks attached to it and where appropriate complete the CFA document and deal with any other relevant paperwork. This means that if your case is successful you should be awarded compensation. Where successful you may be entitled to recover some of the costs from your opponent. You will be given credit for any costs recovered against what you will have to pay. You will have to pay a “success fee” but this will be limited so that the success fee is no more than 25% of your damages for pain, suffering, loss of amenity and past losses. If you
do not recover compensation, so long as you act in accordance with the terms of the CFA agreement then we will not charge you for the work that we have carried out.
The Success Fee
The success fee is a charge that we make at the end of the case. This reflects the fact that we are taking a risk in handling your case on a CFA because if we do not win we will not be paid anything. The success fee is expressed as a percentage figure and is based on a percentage of the fees and NOT as a percentage of your compensation. The success fee is worked out at the beginning of your case and is calculated by reference to how complex the case is and the chances of winning. The rules limit the deduction for the success fee to no more than 25% of your damages for pain, suffering and loss of amenity and past losses. No deduction can be made from your compensation for future losses e.g. future loss of earnings. It is important to note that whilst the success fee deducted from your damages is limited to 25% you may still have to pay more that relates to a shortfall in costs between the amount we are entitled to bill and the costs you recover from your opponent. Any such shortfall will usually be deducted from your damages as well.
Who pays your costs and the Success Fee?
If your claim is successful then as well as paying you compensation your opponents will be liable for some but not all of your costs and expenses (disbursements). However, your opponent or their insurer will not be liable for the success fee. You will have to pay the success fee which will be met out of your damages but cannot exceed 25% of the damages awarded for pain, suffering, loss of amenity and damages for pecuniary loss (monetary) other than future pecuniary loss, in other words future loss of earnings. Separate to the success fee, you may also have to contribute to your costs to make up the shortfall between the costs we are entitled to charge. We have deducted the amount recovered from your opponent. We will aim to agree any such shortfall contribution with you so it is clear what you have to pay.
What does it cost if you lose?
As a general principle the loser of a case will have to pay some of the winner’s costs so even with a CFA it is recommended that you are insured against the risk of you losing and having to pay your opponent’s costs and your own expenses (disbursements) other than our fees. Examples of your disbursement expenses are court fees, expert’s fees such as doctors providing medical reports. You are advised to have legal costs protection insurance in conjunction with the CFA. This is often known as After The Event Insurance (ATE). Whilst the CFA exempts you from paying costs to us, you may still be liable to pay some of your opponents costs in addition to your own disbursements. Where you claim damages for personal injury you are likely to have some protection against the risk of paying your opponent’s costs even if you lose. The present rules incorporate a certain degree of costs protection in personal injury actions. This is known as Qualified One Way Costs Shifting or “QOCS”* for short. Essentially this means you wouldn’t have to pay your opponent’s costs even if you lose your claim but you will still be liable for your own disbursements. These disbursements in themselves can add up and there are certain circumstances where you may not get the full benefit of “QOCS”* for example where the opponent makes a formal offer to settle called a Part 36 Offer and you proceed and fail to beat your opponents offer. Unless you have adequate pre-existing legal expenses cover we would usually recommend that you still obtain an ATE policy to give you maximum protection against exposure to any costs. Where you require an ATE policy we will arrange this insurance on your behalf. The premium for this insurance cover will not be payable until the end of your claim and only if you win. If you lose, the cost of the premium is usually self-insured i.e. covered and therefore you will not have to pay anything. We will let you know if we are unable to provide you with a policy on these terms and discuss your options with you.
Part 36 Offers to Settle Costs Consequences
You or your Opponent may make formal offers to settle your claim under Part 36 of the Civil Procedure Rules (CPR). These offers are known and referred to as “Part 36 Offers”. A significant feature of a Part 36 Offer made by your Opponent is that if you do not accept and then fail to beat such an offer, you will be liable to pay your Opponents costs from the date the offer is made until the claim is concluded. QOCS will not protect you from liability to pay your Opponents costs where these are due to your failure to beat an offer made under Part 36 of the CPR. However, certain ATE insurers may offer you protection against the risk of failing to beat an Opponent’s Part 36. We endeavour to arrange ATE insurance that includes Part 36 protection.
What are Disbursements?
As the case proceeds, it will become necessary for certain expenses to be incurred. For example, we may be charged by your doctor or the hospital for supplying us with copies of your medical notes. If we require an expert’s report such as a medical report from an independent doctor about your medical condition, the doctor will make a charge for this. If we need to commence court proceedings we will also be charged by the court at various stages and there may be other payments of this nature. These expenses or disbursements as they are called, will remain your responsibility but we will usually pay them out on your behalf. Your opponent will normally refund your disbursements upon the successful conclusion of your claim. However if you lose, you will be still liable to pay or reimburse us for these disbursements unless you are protected by legal expenses insurance, where your insurer will usually pay these disbursements for you.
What do I stand to lose?
The benefit of a CFA with insurance is that if you win your case you will receive compensation at no risk, whereas if you lose, apart from the time that you have spent on your claim, your claim will cost you nothing. You do not have to have a CFA and could decide to accept personal responsibility for our costs, your own expenses and those of your opponent where QOCS protection fails to apply. However, by entering into a CFA you will be avoiding that risk. The whole point about a CFA with an insurance policy is that there is little risk to you in pursuing your claim. The risk is ours! We will work hard to achieve the success you deserve. Don’t be afraid to ask us to explain in more detail if you need to, and we will be very happy to do so.
What if I already have Legal Expenses Insurance?
You may already have the benefit of legal expenses insurance or a legal protection policy, either under or as an addition to your motor policy. You may also be covered for legal expenses insurance under a household or contents policy or even with a credit card. You will need to check carefully if you have such protection. If you do, or think you do, you should let us know. We can still undertake your claim for you by arrangement with your legal expense insurance company and if you give us their details we will contact them to arrange this. If you have legal expenses cover, your legal expense insurer may contact you to arrange your representation by their choice of solicitor, however, you are free to choose your own legal representatives and you should not feel under pressure or obliged to instruct a solicitor chosen by your insurer. You are perfectly entitled to instruct us. If you tell us who your legal expense insurer is, we will contact them for you and arrange for them to cover you with us. Should they refuse cover, we may still be able to act for you on a “No Win, No Fee” in any event.