Writing Conditional Fee Agreements (UK)

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

CFAs, or Conditional Fee Agreements, are becoming increasingly popular as a way for those in need of legal representation to access justice. This is especially true for those unable to fund a full legal representation or who stand at risk of losing their case due to lack of financial resources: the CFA protects the lawyer from the potential costs incurred from such a loss. With this in mind, I believe it is essential that these agreements be embraced by all members of the legal community as an integral part of safeguarding access to justice for all.

CFAs provide an alternative source of legal funding, helping to reduce the burden on courts and make justice more accessible - even for people who may not be able to afford it otherwise. Furthermore, CFAs incentivise lawyers to take on cases which might otherwise have been deemed too risky or expensive - thus ensuring that all cases are given their day in court regardless of economic position.

At Genie AI we understand the importance of CFAs and have developed a community template library specifically focused on this area. Our AI-driven library uses millions of data points as it acquires knowledge about what constitutes market-standard conditional fee agreements. This means that anyone can draft and customise high quality documents without having to pay out vast sums in solicitor fees - allowing users greater control over their case without sacrificing any level of professionalism or expertise when drafting contracts. We do not require users to have an account with Genie AI either; our sole aim is simply providing people with free templates so they can help get their case off on the right footing.

So if you’re held back by financial constraints when it comes time for selecting your legal counsel then CFAs might just offer you that much needed lifeline - affording you recourse where previously none existed whilst also upholding high standards within the wider professional community and beyond. Read on below for our step-by-step guidance and information on how you can access our template library today!

Definitions (feel free to skip)

Conditional Fee Agreement (CFA): A contract between a lawyer and a client in which the lawyer agrees to provide legal services in exchange for a success fee if the case is won or accepted.
Contingency Percentage: The percentage that will be used to determine the amount of the success fee.
Terms of Payment: The conditions under which the success fee will be due and how it will be calculated.
Liability and Indemnities: The liabilities and indemnities of each party in the event of a dispute or breach of the agreement.
Terminaton: The conditions under which the agreement can be terminated.
Applicable Laws and Regulations: The laws and regulations that govern the agreement.
Legal Implications: The legal consequences of a breach of the agreement, such as penalties or remedies.
Bears the Risk: Who will be responsible for any losses in the event of the case not being successful.

Contents

• What is a Conditional Fee Agreement?
• Definition of a Conditional Fee Agreement
• The Benefits and Risks of a Conditional Fee Agreement
• Benefits of a Conditional Fee Agreement
• Risks of a Conditional Fee Agreement
• Negotiating and Drafting the Conditional Fee Agreement
• Identifying the Parties Involved
• Establishing the Scope of the Agreement
• Discussing and Agreeing on the Terms and Conditions
• Negotiating and Drafting the Success Fee
• Establishing the Contingency Percentage
• Discussing and Agreeing on the Percentage of Success Fee
• Key Clauses of a Conditional Fee Agreement
• Terms of Payment
• Liability and Indemnities
• Termination
• The Legal and Regulatory Framework Surrounding a Conditional Fee Agreement
• Applicable Laws and Regulations
• Legal Implications for Breach of Agreement
• Common Issues to Consider in Negotiation of a Conditional Fee Agreement
• Determining Who Bears the Risk in the Event of a Loss
• Negotiating Fees in Advance
• Consideration of Any Costs
• Tips for Drafting a Conditional Fee Agreement
• Using Plain English
• Including Clear Definitions & Explanations
• Ensuring the Agreement is Enforceable
• Finalizing the Agreement and Executing the Document
• Verifying All Parties are in Agreement
• Signing the Agreement
• Post-Execution Considerations
• Reviewing the Agreement Regularly
• Ensuring Compliance with Applicable Laws and Regulations

Get started

What is a Conditional Fee Agreement?

• Understand what a conditional fee agreement (CFA) is and the purpose of it
• A CFA is an agreement between an individual or business and their lawyer
• It enables the lawyer to recover the costs of their services by taking a percentage of the damages or compensation that is awarded
• The agreement outlines the percentage of the damages or compensation that the lawyer will receive if the case is successful
• It also outlines the payment structure for the services provided by the lawyer
• Once you have a good understanding of what a CFA is, you can move on to the next step.

Definition of a Conditional Fee Agreement

• Understand the definition of a Conditional Fee Agreement (CFA): a CFA is an agreement between a client and a lawyer or firm which allows the lawyer or firm to charge an uplifted fee (or success fee) in the event of a successful outcome
• Learn the differences between CFAs and other funding arrangements such as Legal Aid and Private Funding
• Familiarise yourself with the relevant legislation, case law and practice directions in relation to CFAs
• Determine the type of CFA that is most suitable for your client’s case
• Check that all relevant parties have agreed to the CFA
• When all of the above steps have been completed, you can move on to the next step.

The Benefits and Risks of a Conditional Fee Agreement

• Understand the risks and benefits of using a CFA before entering into one, as they can be complex and involve a certain amount of risk
• Make sure to read the CFA thoroughly and be aware of the potential pitfalls
• Consider the potential cost of entering into a CFA, including any additional costs or fees
• Discuss any concerns with your solicitor before signing the CFA

Once you have read and understood the risks and benefits of a CFA, you can move on to the next step.

Benefits of a Conditional Fee Agreement

• Understand the advantages of a Conditional Fee Agreement (CFA), including:
• Reduced upfront costs for clients
• The potential for a “no win, no fee” arrangement
• The possibility of a higher fee than would normally be charged
• Consider the benefits of using a CFA in your particular case
• Establish the terms and conditions of the CFA, including:
• The success fee
• Potential disbursements
• A system for monitoring progress

Once you have established the benefits of a CFA and set out the terms and conditions, you will have completed this step and can move on to the Risks of a Conditional Fee Agreement.

Risks of a Conditional Fee Agreement

• Understand the potential risks to your firm of entering into a Conditional Fee Agreement
• Consider the time limit for the client to pay you the success fee
• Make sure to set the success fee at an appropriate level
• Understand the risks of adverse costs orders
• Check that the agreement is compliant with applicable law and regulations
• When you are confident that you understand the risks of a Conditional Fee Agreement, you can move on to the next step.

Negotiating and Drafting the Conditional Fee Agreement

• Discuss the terms of the agreement and negotiate the fee with your client
• Draft a Conditional Fee Agreement which includes a detailed description of the services to be provided, the fee, any additional costs, the success fee and the payment terms
• Obtain the client’s signature on the agreement
• Keep a copy of the agreement for your records
• When the agreement is signed, you can move on to the next step of Identifying the Parties Involved.

Identifying the Parties Involved

• Identify the client and the lawyer, and make sure they are both legally competent and able to enter into a conditional fee agreement
• Research the relevant regulations and laws that apply to the agreement
• Ensure that client and lawyer understand their respective rights and obligations under the agreement
• Record relevant personal information, such as contact details, of all parties involved
• When you have identified the parties and collected the relevant information, you are ready to move on to the next step of establishing the scope of the agreement.

Establishing the Scope of the Agreement

• Clarify with the client which services are covered under the agreement
• Define the scope of the services to be provided under the agreement
• Set out the precise legal services to be provided and the limits of the services
• Specify the time frame in which the legal services are to be provided
• Detail the costs and fees associated with the agreement
• Outline the expected outcomes of the agreement

When all of the above points have been agreed upon, you can move on to the next step of Discussing and Agreeing on the Terms and Conditions.

Discussing and Agreeing on the Terms and Conditions

• Discuss the terms and conditions of the agreement with the client, including the scope of the case, the amount of the fee, and the payment schedule
• Reach a consensus between both parties on any changes to the agreement
• Make sure all changes are documented in writing and signed off by both parties
• Confirm the client understands their obligations and responsibilities under the agreement
• Once all changes have been agreed upon and signed off, you will have completed this step and can move on to negotiating and drafting the success fee.

Negotiating and Drafting the Success Fee

• Define the success fee with the client. Success fees are paid out of the client’s proceeds of the case, and should be based on the difficulty and risk of the case.
• Draft the success fee agreement. The agreement should include the success fee rate, a description of the services to be performed, the effective date of the agreement, and the conditions under which the success fee is to be paid.
• Review and revise the agreement. Ensure that all parties to the agreement are in agreement with the terms and conditions of the success fee agreement.
• Sign the success fee agreement. Once all parties have agreed on the terms of the success fee agreement, the agreement should be signed by all parties.

Once the success fee agreement has been negotiated, drafted, reviewed, and signed, the next step can be completed.

Establishing the Contingency Percentage

• Determine the contingency percentage based on the agreed-upon success fee and the risks involved in the case.
• Consider the complexity of the case, the time required, the resources needed, and the likelihood of achieving a successful outcome.
• Agree on the contingency percentage with the client.
• Ensure that the contingency percentage is reasonable and does not exceed the amount of the success fee.
• Document the contingency percentage in the Conditional Fee Agreement.

You will know when you can check this step off your list and move on to the next step when you have negotiated and agreed on the contingency percentage with the client, and have documented it in the Conditional Fee Agreement.

Discussing and Agreeing on the Percentage of Success Fee

• Agree on the percentage of success fee with your client
• Discuss the level of risk and the amount of work required
• Consider the budget available and the financial benefits to the client
• Decide on an appropriate success fee percentage, taking into account all the above factors
• Make sure the percentage is reasonable and achievable
• Document the agreed upon percentage in the Conditional Fee Agreement
• When the percentage of success fee has been agreed upon, move on to the next step, which is key clauses of a Conditional Fee Agreement.

Key Clauses of a Conditional Fee Agreement

• Draft the clauses of the Conditional Fee Agreement that will apply to the case
• Outline the success fee rate and any additional charges
• Specify the payment terms for the success fee
• Agree on any additional costs and how they will be paid
• Determine the circumstances under which the success fee will be payable
• Decide if there will be any dispute resolution clauses included
• Include any other relevant terms and conditions

When you have drafted the clauses of the Conditional Fee Agreement, you can check this off your list and move on to the next step.

Terms of Payment

• Include the payment structure and details in the Terms of Payment section
• Outline what is payable by the client and when
• Make sure to detail any additional fees that may be payable if the case is successful
• Indicate any payment terms agreed with the client
• Specify the circumstances under which the client may have to pay additional costs
• Clarify any arrangements for payment of the client’s own costs
• Include any requirements for payment of a success fee

When you have completed the Terms of Payment section, you can move on to the next step of writing the Conditional Fee Agreement, which is Liability and Indemnities.

Liability and Indemnities

• Determine whether a claim for negligence should be included in the agreement
• Establish what level of liability you’re taking on
• Make sure the agreement covers the client in the event of a negligence claim
• Include a clause that states that any advice given is not a guarantee of success
• Establish who will be liable for legal costs, court fees, and other fees
• Make sure that any limitations of liability are clearly stated
• Make sure that any applicable professional indemnity insurance is noted

You can check this off your list and move on to the next step when you have established the level of liability you’re taking on, included a clause that states that any advice given is not a guarantee of success, and established who will be liable for legal costs, court fees, and other fees.

Termination

• Decide the circumstances in which the agreement can be terminated by either the client or the lawyer - for example, if the client fails to pay the fees or if the lawyer fails to provide the agreed-upon services.
• Make sure to include the consequences of termination, such as the lawyer’s right to claim any unpaid fees.
• Specify a time period for the client to make changes or challenge the agreement before it is terminated.
• Include a clause that allows either party to terminate the agreement if the other party breaches any of its terms.
• Consider including a clause that allows either party to terminate the agreement if there are changes in the law that make it impossible to continue with the agreement.

You’ll know you can check this off your list and move on to the next step once you have made sure that all the relevant clauses regarding termination have been included in the agreement.

The Legal and Regulatory Framework Surrounding a Conditional Fee Agreement

• Understand the applicable laws and regulations which apply to a Conditional Fee Agreement in the UK, such as the Solicitors Regulation Authority Code of Conduct, and any other applicable laws in the jurisdiction
• Research the relevant case law to ensure that any agreement you are writing is compliant with the applicable laws and regulations
• Check the Conditional Fee Agreement to ensure that it meets the requirements of the applicable laws and regulations
• Make sure that the agreement is drafted in accordance with the applicable laws and regulations
• Once you have reviewed the applicable laws and regulations and made sure the agreement meets their requirements, you can move on to the next step.

Applicable Laws and Regulations

• Familiarize yourself with the UK laws and regulations that apply to Conditional Fee Agreements (CFAs).
• Ensure the CFA complies with the UK Solicitors Regulation Authority (SRA) Code of Conduct.
• Familiarize yourself with the relevant case law and statutory provisions.
• Ensure the CFA complies with the UK’s Anti-Money Laundering (AML) regulations.

When you can check this step off your list:

• When you have familiarized yourself with all the applicable UK laws and regulations outlined above.

Legal Implications for Breach of Agreement

• Familiarize yourself with the Unfair Contract Terms Act 1977, as it governs the terms of conditional fee agreements in the UK.
• Take into consideration the fact that the client may be liable for the other party’s costs, in the event of a breach of contract.
• Ensure that the client has sound knowledge of their responsibilities and obligations under the agreement, in order to minimize the risk of a breach.
• Consider the implications of the client’s breach of contract, especially in terms of the potential financial and legal consequences.
• Specify in the agreement the consequences of breach, including breach of payment, and the course of action which may be taken by the solicitor.
• When all the above has been taken into consideration, you have completed this step and can move on to the next step.

Common Issues to Consider in Negotiation of a Conditional Fee Agreement

• Consider the amount of the fee, the method of payment and the time frame for payment
• Agree on a course of action if there is a dispute between the parties
• Determine the risk of losing the case, and who will bear that risk
• Decide on how the fee will be calculated if the case is successful
• Agree on the expenses to be covered by the client
• Establish a timeline and process for terminating the agreement
• Consider the implications of the agreement in the event that the client fails to pay or breaches the agreement

When you can check this off your list: You can check this off your list when all the above points have been discussed and agreed upon.

Determining Who Bears the Risk in the Event of a Loss

• Research the applicable regulations and laws in the jurisdiction where the case will be heard
• Establish who will bear the risk in the event of a loss
• Identify what losses are covered under the agreement
• Determine who will pay the costs of litigation, including any costs awarded by the court
• Negotiate the terms of the conditional fee agreement
• Finalise the agreement by signing and dating all copies

Once all the terms of the agreement regarding who bears the risk in the event of a loss have been agreed upon, the step is complete and you can move on to the next step, which is negotiating fees in advance.

Negotiating Fees in Advance

• Discuss and agree on the fee for the legal services you will provide
• Establish whether you will be paid a fixed fee, or on the basis of time spent
• Discuss the rate that will be charged for the different types of legal services you will provide
• Consider any additional costs that may arise such as expert witnesses, travel, etc.
• Consider how you will be paid and how often
• Agree on any discounts or incentives which may be provided for settling or winning the case
• Document all of the above in the Conditional Fee Agreement (CFA)
• You will know that you have completed this step when you have reached an agreement with the client on the fee and other considerations and have documented it in the CFA.

Consideration of Any Costs

• Establish whether the client will be responsible for any disbursements, such as court fees and expert witness costs.
• Consider any costs that may be recoverable from the other side if the case is successful, such as the other side’s legal costs.
• Estimate the amount of costs and disbursements that may be incurred throughout the course of the case.
• Make sure that the client understands that they will be liable for any costs and disbursements that are not recoverable from the other side.
• Ensure that these considerations are included in the Conditional Fee Agreement.

Once these considerations have been included in the Conditional Fee Agreement, you can move on to the next step, which is ## Tips for Drafting a Conditional Fee Agreement.

Tips for Drafting a Conditional Fee Agreement

• Outline the services the client will receive and the solicitor’s responsibilities in the CFA.
• Explain the solicitor’s charging structure, including the success fee percentage and the arrangements for payment of the base fee.
• Include a summary of the litigation risk assessment and the likelihood of success in the CFA.
• Ensure that the CFA is clear and unambiguous, using plain language and avoiding legal jargon.
• Make sure that the CFA is compliant with the requirements of the Solicitors Regulation Authority.

When the CFA is complete, you will know you can check this off your list and move onto the next step.

Using Plain English

• Ensure that the language used in the agreement is plain and easy to understand.
• Avoid terms and phrases that may be unfamiliar to the client.
• Check that the agreement is free of any legal jargon and technical language.
• If needed, consider using a plain language guide to help ensure the agreement is written in a way that is easy to understand.
• Once you’re satisfied that the document is written in plain English, you can check this off your list and move on to the next step.

Including Clear Definitions & Explanations

• Ensure all terms used in the agreement are defined, such as ‘success fee’ and ‘basic fee’
• Explain each clause in detail, including what is expected of both parties and when payments are due
• Provide a list of any documents or evidence needed to be provided or cited
• Double check that all definitions are correct and that the explanations are logically consistent
• Once all definitions and explanations are included and checked, move on to ensuring the agreement is enforceable.

Ensuring the Agreement is Enforceable

• Research and review the Solicitors Regulation Authority’s rules and regulations to ensure the agreement is compliant
• Ensure the agreement is in writing, signed by both parties and witnessed
• Confirm that the agreement is clear and unambiguous, setting out the scope of the work, the basis of charging, and the basis of recovery
• Arrange for the client to provide a written statement of their financial position, if required
• Check the agreement complies with the Law Society’s Code of Conduct
• Check that all parties are fully aware of their respective rights and obligations under the agreement

Once you have completed these steps, you can move onto the next step: Finalizing the Agreement and Executing the Document.

Finalizing the Agreement and Executing the Document

• Ensure that the agreement is properly signed and dated by all parties
• Ensure that all parties have a copy of the agreement
• Check that all signatures are witnessed
• Make sure that the agreement is secure and stored in a safe and accessible location
• Check that all relevant parties have been informed and provided with a copy of the agreement
• When all steps have been completed, you can move on to verifying that all parties are in agreement with the conditional fee agreement.

Verifying All Parties are in Agreement

• Verify that all parties involved agree to the terms of the Conditional Fee Agreement (CFA) in writing.
• Ensure that all parties have reviewed and signed the CFA documents.
• Contact the client and explain in detail the terms of the CFA, and answer any questions they may have.
• Contact all other parties involved and ensure they have received and reviewed the CFA documents, and that they are in agreement with the terms.
• Confirm that all parties have agreed to all the terms of the CFA and are in agreement with the document.

You’ll know that you can check this off your list and move on to the next step when all parties have reviewed the CFA documents and have agreed to the terms in writing.

Signing the Agreement

• Obtain signature from the client on the agreement
• Get signature from the lawyer or firm who will be representing the client, as well as any other relevant parties
• Ensure that all signatures are witnessed and dated
• Ensure that all parties have received a copy of the signed agreement
• Check that all signatures are valid and in accordance with the applicable laws
• Once all parties have signed the agreement, it is officially binding and can be enforced
• You have completed this step when all signatures have been obtained and verified.

Post-Execution Considerations

• Notify the other parties that the agreement has been signed and is now in force
• Ensure that any provisions in the agreement regarding payment of fees or other costs have been met
• Ensure that any provisions in the agreement regarding timescales for delivery of work, or payment of fees, have been met
• Confirm that all documents and paperwork related to the agreement has been filed according to the agreement’s terms
• Confirm that all parties to the agreement understand their respective rights and obligations
• You will know when you can check this off your list and move on to the next step when you have confirmed that all parties to the agreement understand their respective rights and obligations.

Reviewing the Agreement Regularly

• Monitor the progress of the agreement and the client’s case.
• Ensure that any changes made to the agreement are properly documented.
• Review the agreement’s terms and conditions regularly to make sure that it remains up to date and in line with the legal practice.
• Make sure that the agreement is still in line with the services provided by the solicitor.
• Make sure that the agreement is still compliant with the relevant legislative provisions and applicable laws.
• Check that all parties to the agreement have complied with their obligations and have been fulfilling their duties properly.

You will know when this step is complete when you have reviewed the agreement’s terms and conditions and made sure that it is still in line with the legal practice, the services provided by the solicitor, and the applicable laws and regulations.

Ensuring Compliance with Applicable Laws and Regulations

• Research relevant laws and regulations that apply to your clients and the services you provide.
• Make sure the agreement is drafted in a way that will comply with those laws and regulations.
• Consider whether a court order or other special authorization will be necessary for the agreement.
• Check that the agreement meets all applicable professional conduct rules.
• Make sure that the agreement contains provisions on how to handle any changes in the law.

Once you have ensured compliance with applicable laws and regulations, you can move on to the next step of the guide.

FAQ:

Q: What is the difference between a conditional fee agreement and a retainer agreement?

Asked by Christopher on April 20, 2022.
A: A conditional fee agreement (CFA) is an agreement that allows a lawyer or law firm to provide legal services to a client without payment of an upfront fee. The agreement also allows the lawyer to take a percentage of any settlement or court award as payment for their services. In contrast, a retainer agreement is an agreement between a lawyer or law firm and a client that sets out the scope of the services that the lawyer will provide, as well as the fee structure for those services. The retainer agreement may also include provisions for how the lawyer will be paid if the client wins or loses their case.

Example dispute

Suing a Company for Breach of Contract:

• Plaintiff may raise a lawsuit which references a conditional fee agreement if the company has breached the terms of the agreement.
• The terms of the agreement must be clear and unambiguous in order for the plaintiff to have legal standing.
• The plaintiff must show that the company failed to fulfill its obligations under the agreement, and that the breach caused them harm.
• The plaintiff must be able to prove that they suffered some form of damage as a result of the breach.
• The plaintiff must also show that they were directly affected by the breach and that the amount of damages they are seeking is reasonable and proportional to the actual harm suffered.
• If the plaintiff is successful, they may be awarded damages, including the cost of the conditional fee agreement, as well as other damages such as lost wages, pain and suffering, and emotional distress.

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