Discounted Conditional Fee Agreement (“no win, low fee”)
This method funding is otherwise known as a ‘partial Conditional Fee Agreement’ or a ‘guaranteed fee agreement’.
With this type of agreement legal fees are payable in full in the event of success only (with or without a success fee in addition), but a discounted fee will apply if the case is lost. The discount applied is negotiable and depends of the merits of your case.
What are the advantages?
There are three main advantages:
- Improved cash flow. You will be offered a discount on our standard hourly rates throughout the life of the litigation.
- Improved certainty on costs. You will be better placed to make a provision on your balance sheet for your legal costs, knowing that if the case is lost, you will only have to pay our fees at a reduced rate plus expenses.
- We share the risk with you.
An example of how we charge you under a no win – low fee agreement
Let us say that we agree a “no win, low fee” CFA with you under which we agree to discount our standard fees by 30% and there is a success fee of 100% of the ‘deferred fees’ (i.e. the difference between the standard rates and the discounted rates) if we win.
Throughout the life of the dispute, you pay our fees at the discounted rate of 30% of our standard rates plus disbursements. If success in not acheived, that is all you have to pay us.
If success is acheived, you pay us, in addition to the discounted fees and disbursements, the remaining 30% of our standard rates that were conditional upon the outcome, plus a success fee of 100% of our deferred fees. The total amount due to us on success is therefore 130% of our standard rates (i.e. 70% discounted fee+30% deferred fee+30% success fee).
How is the success fee calculated?
The success fee is calculated as a percentage of the deferred fees. In order to set the level of success fee, we quantify the prospects of success in percentage terms. Once we have assessed the prospects of success, we refer to a “Success Fee Calculator”, to determine the appropriate level of success fee. The success fee cannot exceed 100% of the deferred fees.
How much of the fees charged under a successful CFA can a party to a dispute recover from the opposing party?
The normal rules of recoverability apply up to the full standard rates, i.e. including the deferred fees which become payable on success. The party on a CFA may claim from the opponent the discounted fees and the deferred fees (together known as “base costs”). The success fee (the additional 30% in the example given above) cannot be recovered from a losing opponent. If you are a claimant, the success fee will in effect come out of the damages. It is not a recoverable cost of litigation. The client can expect to recover approximately two thirds of each of the discounted fees and the deferred fees (i.e. together, the base costs) under conditional fee agreements entered into after 1 April 2013.
Is it necessary to notify the opponent that a CFA has been entered into?
No. After 1 April 2013, because you cannot recover it from your opponent, there is no need to inform your opponent if the CFA provides for a success fee.
How does one define success?
Success will be defined by reference to the likely remedies/outcomes of your dispute, often the recovery of money whether achieved through a court order or compromise, but there are many other possibilities. The definition is something that we will discuss and agree with you.
Will barristers work on a CFA?
The answer will depend in each case on the particular barrister. No set of barristers with whom we work regularly has a policy preventing their barristers from working on a CFA.
In the event that this type of fee agreement is of interest to you, please get in touch with us on the numbers below.