Explain what is meant by a conditional fee agreement and when it is used
Writen by Bridget Flynn (December 2006).
What is a conditional fee?
A conditional fee agreement was developed in order to aid people who have a strong civil claim, take their case to court. Due to the nature of the civil court, the losing party must pay both the compensation and all legal fees. This plays a big factor for people deciding whether or not they want to bring a case to court. Conditional fee agreements were first allowed to happen under section 58 of the Courts and Legal Services Act (1990) in personal injury, insolvency and human rights and in 1998 it was extended to all civil litigation with the exception of family proceedings.
How it works
Before the case is brought to court the solicitor and client agree a fixed fee. The agreement will also include what the solicitors ‘success fee’ will be. This can be up to 100% of the agreed normal fee, however most solicitors include a ‘cap’ on their fees of around up to 25% if the damages awarded. Nevertheless the success fee is not a fixed sum; this was highlighted in the case Callery v Gray which was taken to the court of appeal. The judge ruled that the maximum a defendant would be expected is about 20% and around 5% if the case was settled out of court. But these figures are not legislated therefore are not compulsory to enforce. his fee though, is no longer for the client to pay. Under the Access to Justice Act (1999) the losing party must pay this sum on top of other damages and legal fees. The agreements must be in writing and must comply with regulations set down by the Law Society.
When are they used - ‘No win. No fee’
This is the most common variant of the conditional fee agreement. Largely used in personal injury claims, the culture of ‘no win, no fee’ has set up one of blame according to some as and an increase in staged accidents in order to claim for more money, as the adverts on television seem very attractive to career criminals. It is a popular form of conditional agreement because it removes the risk factor, which arises when bringing a case before the civil court. It also removes cost factor, if you lose then there is no financial loss either. However, the solicitors’ firms will consider very carefully whether a client’s case is worth taking on, for the very fact that if they lose then they lose time and money also.
Conditional Fee Agreements have encouraged more people to take their claims to court, in doing so have widened the access to justice people have. ‘No win, No fee’ arrangements have attempted to reduce fees, though it has made solicitors more conscientious of what claim to take on as it is they who stand to lose from the agreement. On the part of the client, they have benefited the most from CFA’s as it has removed the fear factor of costs by going to court, though they still are having to pay for things such as Insurance against losing if No Win, No fee is not available for their case. The legal process is still expensive however CFA’s have reduced the costs dramatically which can only be an advantage.
Describe the other ways of funding legal help and representation when bringing a civil claim
Conditional Fees are only one way in which a person seeking to bring a case to court can do so. However the first in bringing a case to court is by seeing whether or not it is a viable option in the first place. The first point of call for a person is to go to an advice agency or to go directly to a solicitor. In the technology age we live in, it is now possible to go on the internet and find legal advice in a way in which was previous not available. In deciding which, the person must consider how specific they want their advice to be as it can be very costly. I will now be exploring a range of ways in which a person can seek help and ultimately representation.
Advice Agencies
The most well known advice agency is the Citizens’ Advice Bureaux. This organization is situated in most towns. They provide free advice to anyone who asks and are generally concerned with social welfare and debt issues however they also are able to provide a person with information such as local solicitors in the area. Some Bureau’s are able to provide solicitor on a fortnightly basis to give more qualified advice.
Law centers also offer a free legal advice service. These centers tend to be run be law students and aim to provide ‘a first class solicitor’s service…easily accessible, not intimidating’ the last point highlights an important one. Often the reason why a person cannot get access to legal help is because they are afraid to, so by providing a service which aims to break down this barrier can only be an advantage to the wider general public.
However both these agencies have very little or no public funding which can limit their services. If a person feels that the advice they were offered was to general or not useful then going to see a solicitor is the best way. Cost is still an issue, so in a way of reducing the costs on a person, several solicitors’ practices now offer cheap or free interview. An initial interview can only cost around £25 and isn’t means tested.
For people looking to seek compensation, other than those well publicized on television, the Law Society has a free Accident Legal Advice Service. Solicitors in this scheme will provide the client a free initial interview to advise the person whether or not it is worth pursuing.
Financial Legal Aid
The main cost a person has to incur in taking someone to court is the cost of representation. For those on local incomes, they can apply for legal funding. However they have strict criteria. The Legal Services Commission is the body which is responsible for the Community Legal Service Fund, from which civil cases are funded, where applicable. There are a large number of legal matters which are excluded from legal aid eligibility. These range from the making of will, defamation and business law to conveyancing and boundary disputes. However, if injury has been inflicted upon anyone on terms of negligence than the Community Legal Service Fund may consider their case. Cases which cost below £5,000 are also not available for funding, the exceptions being for the mental health tribunal because a person’s liberty is at risk.
The system at present is layered in terms of help financially. For civil cases the levels span from legal help to support funding. In between help is given at court - allowing advice and advocacy (though not as a representative) – and legal representation which would cover all aspects of a particular persons case.
In the process of deciding whether or not a person is eligible, there are cases which do take a priority. An example of this is for housing proceedings, whereby a person may potentially lose their house, so it is important that there case is seen to as quickly as possible.
The criteria for funding is very strict. It is means tested on the basis of both your disposable income and disposable capital. The limits on disposable income in order to qualify are between £3,000 and £8,000. Below £3,000 and you don’t contribute, between the two figures funding is issued on a sliding scale and over £8,000 you receive no legal funding. However even if financially you qualify there are other criteria which then you have to follow. For example, the overall cost of the case, will it be expensive? Is it likely to be successful? Also there is the issue of the availability of sums in the fund. It is not a bottomless pot so if there is no money for your case, none will be provided to you.
If you are unable to secure legal funding then there is the option of using a Conditional Fee Agreement. However if your case looks unlikely to win, a way of protecting yourself against the potentially damaging effects of losing a case, insurance can be taken out against losing. In April 2000 the government changed policy regarding the funding of legal services, making it a more viable and realistic option. There are two types available, the first is ‘Litigation insurance’, this is where the insurance company covers all of your own cost and possible liability to the other party’s cost, up to the limit of indemnity you purchase.
Representation
If you are successful in getting legal aid, then you do not have the choice over who is to represent you. The Legal Service Commission has on 5,000 firms which have been granted contracts. If you were unsuccessful then you can approach Claims firms for personal injuries or insurance companies. This is most likely to be the case with motor insurance companies as your premiums can include a small amount allocated for legal fees so you so wish to use them.
The last alternative is the ‘Free Representation Unit’. Set up in 1992, it helps people who were ineligible for legal aid by presenting their case for them in court at no cost to the person. However they only deal with around 2000 cases a year, so competition is fierce.
The help, advice and representation for people is widespread, however a method in which to achieve this on a low cost basis is very hard, in particular for representation. Legal aid is out there but only for the very poor and if their case is a viable successful one. Advice agencies are abundant however with little or no funding the services they provide are not uniform and this is one critism of the system and one which needs to be addressed because the financial burden placed on people is so great that people are put off from taking a case to court. So the access to justice is narrowed for these people.
Explain the criticisms that have been made of conditional fees and the other methods of funding
Critisms of Conditional Fees
Despite the fact that conditional fees have allowed more people to take their claim to court, there are still those who cannot benefit from these services financially. The poorest of clients cannot afford the insurance premiums and disbursements which go with the agreement. Even if they do have the money, there is no guarantee that a solicitor will take them on. If the case is too risky then it is in the solicitors power to say no. The workload for which the solicitor has to endure in their view may not be worth it as their time could be over 100% of the conditional fee agreed. The only alternative is to pay more money for a solicitor who will take your case on.
Advice Agencies
These establishments are run by volunteers who have had generalized training. At present there is either little or no financial aid and Law centers in particular are at threat from having funding withdrawn from Local Authorities if it is thought they are advising people to take cases against them which could potentially be damaging. If the money isn’t there then the service they provide cannot improve, like for example having a duty solicitor in a Citizens Advice Bureaux more often as fortnightly or not at all isn’t very good. All most everyone pays tax so in their hour of need they are owed a service, but if it isn’t there, then the cost is shifted on the them.
Financial Legal Aid
The criteria for this is very stringent. The way in which it is set out is so that only a bare minimum of people apply for it. The question is, what about the others? If you are a penny over the threshold then you receive nothing. The availability of funds is another issue, if the fund runs out then that is it, no more cases to be taken on. Yet if the pot of the Criminal Defence Service runs out then money is either extracted from the Community Legal Service fund, depleting money yet still or the money gets ‘topped up’. This is a very unfair discrepancy in the system.
Representation
Tied in with Legal aid, the person who represents you is not your choice. Even then the solicitor may not dedicate enough time to your case as they have much more financially lucrative ones on their books. The main critism is here that potentially your case may be compromised due to an issue over money. Money is also an issue for those who do not have legal aid. They may be put off from going to court all together, which in turn is detaching the wider public from the legal system and disillusioning them in their feelings toward getting justice.
In reality allowing conditional fee agreements alone has helped bring over 50,000 cases to court widening the access people get to justice to people who previously may not have had access to However CFA’s are still not totally infallible and neither are the other methods of obtaining help. Without more financial backing, people are going to feel more and more left out of getting the justice they deserve which is something the Lord Chancellor at present should not be proud of.