What Is A Conditional Fee Agreement And How Does It Differ To A Contingency Fee Agreement?
Posted on 13th March 2020
The vast majority of personal injury claims are funded by way of a Conditional Fee Agreement, also known as a “No win, no fee” agreement. In short, a solicitor like we do at MG Legal, your local personal injury solicitor Lancaster, will accept a client’s instruction on a case, providing that they believe it is likely to succeed, on the understanding that legal fees will be recoverable at the end of the case.
This is, of course, a highly simplified description but it does encompass basically what a Conditional Fee Agreement entails and what is expected of both parties. A solicitor will carry out work for an active client, provided the prospects of success remain in excess of the required threshold, usually 51% because this is the numerical representation of the Civil Burden of Proof, “the Balance of Probabilities”, also described as the requirement to prove what is “more likely than not” to have occurred.
What is a Conditional Fee Agreement?
A Conditional Fee Agreement is, like any other legal retainer, a contract between client and solicitor and it is onerous on both parties. It can also be breached or terminated if one party does not uphold their obligations and also if the Prospect of Success drops below the required threshold; this can happen due to new evidence emerging, a witness providing a different version of events or a medical expert offering an opinion that does not support the case. The commencement of work on a Conditional Fee Agreement does not, therefore, mean that the solicitor must keep working for a client regardless, nor does it mean a client can simply ‘drop’ their claim without good cause. Until the case concludes, the personal injury solicitor is, in effect, working for free and so it is a contract based party on an assessment of a case and partly on goodwill and mutual assistance between the solicitor and client.
A Conditional Fee Agreement is generally entered into when a matter is “cost bearing” to some degree ie. when there is some element of legal fees that can be recovered from the fault party or their insurer. Since 2013, when recoverable fees for many matters were reduced dramatically, Conditional Fee Agreements also permit solicitors to deduct up to 25% of their client’s damages (up to no more than 100% of the value of their costs) to cover the cost of work carried out. Whilst this is not necessarily palatable for clients, it is the way the law has been written and with fees paid by fault parties being as low as £600.00, no matter how much work has been done during the case, it is a necessity of the system that success fees exist if solicitors are to continue acting in these matters. At MG Legal, your personal injury solicitor Lancaster, we look to accept all personal injury claims on the basis of a Conditional Fee Agreement. However, there are some types of claim that cannot be accepted this way and this is there the Contingency Fee Agreement comes in.
What is a Contingency Fee Agreement and why is it different?
Where a Conditional Fee Agreement covers matters in which at least some reasonable element of legal fees can be recovered from the fault party, Contingency Fee Agreements cover those where where are little to no recoverable fees. These include Small Claims Track matters, Criminal Injuries Compensation Claims and Employment Tribunal Claims. Even if these types of claim succeed, the recoverable legal fees are usually no more than £80.00 if not zero. In this eventuality, a solicitor may offer to accept instruction on a Contingency Fee Basis.
These agreements are based on the same premise as Conditional Fee Agreements, however, there is no cap on the percentage of damages that can be deducted from a client’s damages. The percentage will always be set at the start of the claim and is, most usually, set around the 33% mark. The higher percentage reflects the fact that there will be costs recoverable from the fault party and so, the personal injury solicitor’s fees must be paid by someone. If the client wishes to proceed without paying monies up-front, this is the only viable way to secure legal representation.
The obligations on solicitor and client are the same, in that the prospects of success must remain reasonable and the client must cooperate with the solicitor in progressing the claim. There is also no secondary cap on the success fee, as is the case with Conditional Fee Agreements where the deduction cannot exceed the value of the recovered costs (in these matters no costs are recovered), so any Contingency Fee will equal the percentage agreed at the start.
Which type of fee agreement do I need?
Both of these agreement types do incentivise the solicitor to maximise damages as they are, in effect, working on a commission basis.
MG Legal, your personal injury solicitor Lancaster, also acts on Contingency Fee Agreement matters and we appreciate that this is not a situation you would want to find yourself in, it does offer access to justice and to legal representation in a way that does not involve you paying fees up-front.
If you have been involved in any incident where you have sustained personal injury that is not your fault, contact MG Legal, your local personal injury solicitor Lancaster, by phone, email, web-contact form or by dropping into one of our offices in Lancaster, Garstang or Longridge and we will put you in touch with our specialist team and aim to get your claim moving the same day.
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