Conditional Fee Agreements Eligibility: Key Considerations

Conditional Fee Agreements (CFAs), also known as 'no win, no fee' agreements, can be an effective way to fund the right dispute but they are not suitable for every case or every client.

Before a CFA is considered, the strength and value of the claim, the likely costs involved and the prospects of making a meaningful recovery all need to be assessed.

The strength of the case is only part of that assessment. There must also be a realistic prospect of recovering money if the claim succeeds.

This will usually mean that the defendant has sufficient financial resources to satisfy any judgment and costs order, or that there are identifiable assets or funds that could be realised following a successful outcome.

CFA eligibility checklist

As a general guide, our dispute resolution team may consider your claim to be suitable for CFA funding where:

• You are bringing the claim, rather than defending one.
• The value of the claim is more than £100,000.
• The claim has strong prospects of success following an initial legal review.
• There is a realistic prospect of recovery, because the defendant has sufficient means to meet any judgment and costs order, or there are identifiable assets or funds that could be realised.
• You are able to meet other potential costs of the litigation, including disbursements and any potential liability for the opponent’s costs where insurance is unavailable or not cost-effective.

Meeting these criteria does not automatically mean that a CFA will be appropriate.

Each case needs to be assessed individually.

Is a Conditional Fee Agreement right for your claim?

If you think your claim may meet the criteria above, the next step is to speak to our Dispute Resolution team. We can carry out an initial review of the merits, value, likely costs and recovery prospects of your claim and advise whether a CFA, Discounted CFA or another funding arrangement may be appropriate.

Contact Our Dispute Resolution Solicitors

What is a Conditional Fee Agreement?

A Conditional Fee Agreement is an arrangement under which some or all of a solicitor’s legal fees depend on the outcome of a case.

CFAs are often referred to as “no win, no fee” agreements. That description is familiar, but it can be misleading because it does not explain all of the costs and risks involved.

A CFA usually means that the solicitor agrees to put some or all of their own fees at risk. What happens next depends on whether the claim succeeds or fails.

If you win

If your claim succeeds:

• You pay our basic costs (calculated by multiplying the spent by our hourly rates) and expenses. Some (though usually not all) of those costs may be recoverable from your opponent, subject to the usual rules on costs recovery.
• You pay an agreed success fee. This will be a percentage of the basic costs. This is not normally recoverable from your opponent.
• The level of the success fee reflects the risk we have shared with you by agreeing that some or all of our fees depend on the outcome.

It is important to remember that even where costs are recoverable, you may not recover every pound you have spent. There can be a shortfall between your total legal costs and the amount your opponent is required to pay.

If you lose

If your claim is unsuccessful:

• You will not pay the legal fees we have agreed to put at risk under the CFA. This is where the term “no win, no fee” originates from.
• You may still have to pay expenses and disbursements, such as barristers’ fees, expert fees and court fees.
• You may also have to pay some or all of your opponent’s legal costs.

This is the point that “no win, no fee” does not always make clear.

A CFA can reduce your exposure to your own solicitor’s fees, but it does not necessarily remove all of the financial risk of bringing a claim.

What are disbursements?

Disbursements are costs paid to third parties as part of running a case.

These are separate from your solicitor’s own legal fees and can include:

• Barristers’ fees.
• Expert witness fees.
• Court fees.
• Other third-party expenses required to progress the claim.

Depending on the case and the funding arrangement, these may need to be paid as the matter progresses.

What are adverse costs?

Adverse costs are the legal costs you may be ordered to pay to your opponent if you lose.

A CFA usually deals with the relationship between you and your own solicitor. It does not, by itself, protect you against an order to pay the other side’s costs.

That risk needs to be considered carefully before proceedings are pursued.

Why does the defendant’s ability to pay matter?

Winning a case and recovering the money awarded are not the same thing.

A claim may have strong prospects of success, but if the defendant does not have the means to pay a judgment, there may be little practical benefit in pursuing it.

For that reason, CFA suitability depends not only on the legal merits but also on whether there is a credible route to recovery.

That may mean:

• The defendant has sufficient financial resources to satisfy a judgment and costs order; or
• There are identifiable assets, funds or property that could be realised or enforced against following a successful claim.

This is an important part of the commercial assessment. A successful judgment needs to have a realistic prospect of producing an actual financial recovery.

Once a win is achieved you become liable to us for our fees under the CFA irrespective of whether the defendant pays so this is an essential factor for you in considering the suitability of a CFA.

What is a Discounted CFA?

A Discounted CFA is a variation of a standard Conditional Fee Agreement.

Under this arrangement, you pay reduced hourly rates while the case is progressing.

If you win

If the claim succeeds:

• You pay the difference between the discounted rates and our standard rates; and
• You pay an agreed success fee.

Because we have taken less financial risk than under a full CFA, the success fee will usually be lower.

If you lose

If the claim is unsuccessful:

• You do not pay the uplift from the discounted rate to the standard rate;
• You do not pay the success fee, but;
• We retain the reduced fees already paid.

The other consequences are broadly the same as under a standard CFA. You may still be responsible for disbursements and any liability for your opponent’s costs.

Are CFAs suitable for every claim?

No. Even where a case appears legally strong, a CFA may not be suitable if:

• The value of the claim is too low compared with the likely costs;
• The defendant may not be able to satisfy a judgment;
• There are no identifiable assets against which enforcement could take place;
• Substantial disbursements will be required;
• The adverse costs risk is too great; or
• The overall economics of the case do not justify the arrangement.

CFAs are therefore best viewed as one possible way of funding litigation, rather than a standard option for every dispute.

Learn about other ways you can fund your case

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