Conditional Fee Agreements (CFA’s) or ‘No Win No Fee Agreements, as they are often referred, are an agreement between a solicitor and their client. These agreements are used a great deal in personal injury cases, often enabling people who maybe couldn’t afford to instruct a solicitor in a claim for compensation to pursue a claim on the basis that the Solicitor takes on the risk that if the claim is not successful then they dont get paid. That’s right if your Solicitor doesn’t win the claim then they dont get paid.
CFA’s are extremely important documents. They enable a solicitor to act on your behalf and to receive instructions from you on the basis that provides you with the peace of mind in knowing that if your claim is not successful then your Solicitor/Injury lawyer will have to write-off his legal fees.
Once you have signed a completed CFA agreement then your solicitor is able to work on your file without billing you and reputable lawyers will even fund your entire claim and progress it right to the end without ever charging you.
The CFA agreement itself is a very complex piece of literature. The CFA states that the client will have to pay their solicitors legal fee’s. However, this is rarely the case! Only in certain circumstances will you generally be asked to pay your solicitors legal fees, such as: if you fail to co-operate with your solicitor in the progression of your claim; if you pull out of the agreement against your solicitors advice; or if the client is found to have been acting in a fraudulent way then in these circumstances the solicitor can usually charge the client under a “No Win No Fee Agreement”.
The reason the CFA is phrased the way it is, which makes it appear that you will be charged is because of the indemnity principle. The Indemnity Principle means that you have to have a liability for your Solicitors legal fee’s in order for the Solicitor to recover the fee’s from the other insurers if your claim is successful.
Under a CFA you have a legal liability for your legal fees if your Solicitor wins your claim. This legal liability should allow your Solicitor to recover your “reasonable legal fees” from the other insurer. If you have no legal liability for your Solicitors legal fees then your Solicitor because of the indemnity principle can not recover the legal fees from the other insurers.
To run your claim under a “NO Win NO Fee” Solicitors must have a signed CFA from their client. This then enables the solicitor to request their fee’s be paid by the third party when the claim is successfully settled. If a solicitor is unable to confirm that they have a signed CFA from their client to the other insurers then the other insurers may refuse to pay the legal fees on the basis that the Solicitor does not have a retainer with the Client.