The prospect of legal fees often deters people from seeking compensation for personal injuries. However, Conditional Fee Agreements (CFAs) have revolutionised access to justice, allowing individuals to pursue claims without financial risk. This comprehensive guide will explain CFAs, how they work, and their implications for personal injury claimants.
What is a Conditional Fee Agreement (CFA)?
A CFA is a legal contract between a client and their solicitor that outlines the terms under which the solicitor will represent the client. Key features include:
- No upfront costs for the client
- The solicitor only gets paid if the claim is successful
- If successful, the losing party pays most of the legal costs
- The client contributes up to 25% of their compensation towards legal fees
With Direct2Compensation, CFA agreements are available with all personal injury claims, from work accident claims through to slip and trip claims.
How CFAs Work in Personal Injury Claims
By offering a CFA, a solicitor is taking the risk that they will not receive any payment for their work. If the solicitor feels that they are more likely to win than lose, they will agree to running the claim on a CFA basis. If they win, they get paid. However, if they lose, they will not receive a penny. Hence why CFAs are also known as, ‘No Win No Fee‘.
Risk Assessment
Before offering a CFA, solicitors will assess the claim’s prospects of success. They typically only offer CFAs for claims with a good chance of winning.
Fee Structure
Under a CFA:
- If the claim is unsuccessful, the client pays nothing
- If successful, the losing party pays the majority of the legal costs
- The client contributes up to 25% of their compensation towards legal fees
- Any After The Event (ATE) insurance premium is also paid by the client if successful
Changes Since 2013 – Post-LASPO Act
The Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act introduced significant changes:
- Solicitors can no longer recover success fees from the losing party
- Claimants now contribute up to 25% of their compensation towards legal costs
- ATE insurance premiums are no longer recoverable from the losing party
Benefits of CFAs
- Access to Justice: Allows individuals to pursue claims regardless of financial status
- No Financial Risk: Claimants don’t pay if the claim is unsuccessful
- Aligned Interests: Solicitors are motivated to win as their payment depends on success
- No Upfront Costs: Claimants can start their claim without any initial outlay
Potential Drawbacks
- Contribution from Compensation: Successful claimants contribute up to 25% of their award
- ATE Insurance Costs: Claimants pay for ATE insurance if the claim is successful
- Selective Case Acceptance: Solicitors may only take on cases with high chances of success
After The Event (ATE) Insurance
As previously stated, claims that are pursued on a conditional fee agreement basis are not risk free. Despite the best efforts of your solicitor to properly evaluate your claim, there is always a risk that the claim could fail. Therefore, your solicitor may decide to take steps to protect you and them from the risks of losing and paying costs by taking out insurance to limit your exposure.
ATE insurance protects claimants from paying the opponent’s legal costs if the claim is unsuccessful. Key points:
- Usually arranged by the solicitor
- Premium is only payable if the claim is successful
- Typically costs between £150-£250 for standard claims
Maximising Your Compensation Under a CFA
- Choose a reputable, specialist personal injury solicitor
- Provide all requested information promptly and accurately
- Keep detailed records of all expenses related to your injury
- Follow medical advice and attend all appointments
- Be cautious about early settlement offers from insurers
Conditional Fee Agreements have made it possible for many individuals to pursue legitimate personal injury claims without financial risk. While the 25% contribution from successful claims may seem significant, it’s important to remember that 75% of a fair settlement is better than no compensation at all. CFAs continue to play a crucial role in ensuring access to justice for personal injury victims.
Frequently Asked Questions
Generally, no. This fee is standard under CFAs post-LASPO. However, some solicitors may offer to cap their fees at a lower percentage for certain types of claims.
If you lose, you typically won’t have to pay any legal fees, provided you’ve complied with the terms of your agreement.
Yes, you can switch solicitors, but be aware that your new solicitor may need to honour any costs incurred by your previous solicitor if your claim is successful.
CFAs are available for most personal injury claims, but solicitors assess each case individually to determine if they can offer a CFA.
Reputable solicitors will be transparent about their fees. Don’t hesitate to ask for a breakdown of costs and compare with other firms.
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