A Conditional Fee Agreement (CFA) is the written agreement between a client and solicitor when making a No Win No Fee personal injury claim.
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What is a Conditional Fee Agreement?
A conditional fee agreement (CFA) is a funding arrangement that enables you to pursue a personal injury claim without incurring financial risk. Under a CFA, your solicitor agrees that if your case is unsuccessful, you won’t have to pay their legal fees.
This type of agreement can be used to fund various types of claims, including workplace accidents, road accidents, medical negligence, criminal assaults and wrongful deaths.
If your claim succeeds, your solicitor’s payment will usually be a success fee capped by law at 25% of certain parts of your compensation. This type of agreement ensures everyone has access to legal representation and makes the claims process far less stressful.
To learn more about what a conditional fee agreement is, how it works and whether your claim could be made under a CFA, please keep reading our guide below.
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Is a conditional fee agreement the same as No Win No Fee?
Yes. A conditional fee agreement is the formal term for what most people know as no win no fee, and is the most common funding option in personal injury cases.
No win no fee was introduced in the UK in 1995 by the Conditional Fee Agreements Order 1995. The primary reason was to ensure that all claimants have access to legal representation without incurring any upfront costs or financial risks.
This type of agreement shifts the risk of litigation from the client to the solicitor, ensuring that a claim is only pursued if there is a reasonable chance of success. It also motivates the solicitor to work diligently to achieve the best possible outcome, as their payment depends on it.
How does a conditional fee agreement work?
The conditional fee agreement is a formal contract under which a solicitor takes on the risk of litigation and not being paid if the case is unsuccessful. Under a CFA:
- You won’t need to pay your solicitor before your case is settled.
- If your claim fails, you will not have to pay them anything at all
- If they win your claim, your solicitor will receive a success fee, which is a percentage of your compensation, legally capped at 25%.
The CFA is usually signed at the start of your case, before your lawyer begins working on your claim. The contract must clearly state the terms of the arrangement and include the following details:
- The type of claim that the CFA relates to.
- The services covered by your lawyer.
- Confirmation that you will not pay legal fees if the case is lost.
- The circumstances under which you are liable to pay legal costs.
- When and how the success fee will be deducted from your compensation.
- The exact amount you will pay under various circumstances.
Will I have to pay anything up front under a CFA?
No, you will not have to pay your solicitor’s legal fees upfront under a conditional fee agreement. This is one of the main advantages of CFAs, which ensures that anyone can pursue a claim, regardless of their financial situation.
Furthermore, your solicitor’s fees are only payable if your case is successful and you recover compensation, through a success fee that is agreed upon from the outset and capped by law.
This eliminates the financial risk of litigation, providing peace of mind and allowing you to focus on recovery without worrying about the costs associated with litigation.
What is the success fee in No Win No Fee claims?
In a conditional fee agreement, the success fee is a pre-agreed percentage of your compensation that your solicitor will deduct for their services if you win the case. This covers their risk of not being paid at all if the claim is lost.
The success fee is agreed upon in advance and will be written in your CFA. By law, in most personal injury cases the maximum success fee that can be taken from your payment for pain, suffering and past financial losses is capped at 25%.
The success fee cannot be applied to future care costs or future loss of earnings (i.e. if your injury means you will never be able to return to work), meaning you will keep 100% of these amounts.
Before 1 April 2013, the success fee was recoverable in whole or in part from the losing party. However, after the Legal Aid, Sentencing and Punishment of Offenders Act 2012, the success fee must be deducted from the claimant’s compensation award.
What are the benefits of a conditional fee agreement?
The main benefits of a CFA include:
- You don’t have to pay your solicitor anything at the start of your case.
- You can hire legal representation, regardless of your financial circumstances, with greatly reduced financial risk.
- You don’t have to pay your lawyer anything if you lose, which gives peace of mind.
- The solicitor takes on the risk of litigation, as they only get paid if you win.
- You can be sure that your case has merit, and you have a fair chance to get compensation.
- The success fee is agreed from the beginning and capped at 25%.
- There are no hidden charges, and you will not be left out of pocket if you lose.
Will my solicitor offer me a conditional fee agreement?
Before taking on your claim under a no win no fee arrangement, a personal injury solicitor will offer you a free case assessment to verify whether:
- Another party (the defendant) owed you a legal duty of care.
- Their negligence or wrongdoing has caused an accident.
- You suffered an injury or illness as a direct result of their negligence.
- You are within the limitation period to start a claim, which is typically 3 years, subject to some exceptions.
If these can be established with sufficient evidence, your solicitor will help you claim compensation on a no win no fee basis. They will also help you gather supporting evidence, such as medical reports, witness statements and CCTV footage.
What types of claims can be made under a CFA?
All types of personal injury claims can be funded under a conditional fee agreement, including:
- Road traffic accident claims, such as car accident claims, pedestrian accident claims and car park accident claims.
- Workplace accident claims, such as machinery accident claims, industrial disease claims and manual handling accident claims.
- Public place accident claims, such as slips, trips and falls, pothole accident claims and school accident claims.
- Medical negligence claims, such as misdiagnosis claims, medication error claims and birth injury claims.
What happens if I win my claim under a CFA?
If you enter into a CFA with your personal injury lawyer and you win your case, you will receive compensation for the injuries and losses you incurred. The defendant will pay you the amount agreed upon through negotiations or as ordered by the court, and may also be ordered to pay some or all of your legal expenses.
Your solicitor will then deduct their agreed success fee from your compensation, which will not exceed 25% of your general damages and past financial losses. If you also took After the Event (ATE) insurance, the premium will also be deducted from your settlement.
Once these deductions are made, you will receive the majority of your compensation directly into your bank account. Alternatively, your injury lawyer could set up a personal injury trust in your name where you can keep your funds to ensure they don’t affect your eligibility for means-tested benefits.
What happens if I lose my claim under a CFA?
If you lose a no win no fee claim, you will not receive any compensation for your pain, suffering and financial losses. However, you will not have to pay your solicitor’s fees. This is the main advantage and key protection provided by a conditional fee agreement.
You may, however, be responsible for certain expenses and disbursements, such as court fees, expert witness fees and medical reports. For this reason, most solicitors take out ATE insurance from the beginning of the case. The ATE will cover all these costs, so you will not be left out of pocket.
Also, if you lose the claim, you will not have to pay any of the defendant’s legal costs. This is due to Qualified One-Way Costs Shifting (QOCS), which limits your liability for the defendant’s expenses if you lose a genuine claim.
Are CFAs the only funding option for personal injury claims?
No, conditional fee agreements are not the only option for funding a personal injury case. Alternative funding options include:
- Legal expenses insurance (LEI). This is often included in vehicle insurance and household insurance policies and could cover the cost of legal representation if a claim arises.
- Trade Union funding. If you are a member of a trade union, the union may cover your litigation costs and disbursements, meaning you will keep all your compensation if you win.
- Legal Aid. This type of public funding used to be widely available to claimants, but nowadays it only covers claims for severe birth injuries to babies.
- Self-funding. If you have the means, you can also pay your legal fees yourself. This could mean you get more compensation if you win, but you will have to pay your solicitor if you lose the claim.
After assessing your case, your personal injury solicitor will advise you on the legal funding option that best suits your circumstances, which in most cases will be a conditional fee agreement (no win, no fee).
Key takeaways
Conditional fee agreements in personal injury cases offer a way to pursue compensation without incurring upfront legal fees and with significantly reduced financial risks. Under a CFA, your solicitor only receives a success fee if they win your claim. If you lose, you won’t have to pay them a single penny.
To find out if you can start a compensation claim on a no win no fee basis, call 0800 470 0472 today or request a call back. You will receive a free, no-obligation consultation during which you can ask any questions you have about CFAs.
