The New Rules on Conditional Fee Agreements.

From the 1st April 2013 new rules on conditional fee agreements (CFA) have been introduced. If a client enters into a CFA or an After the Event policy (ATE) on or after the 1st April 2013 the law permits with a few exceptions that the client pays his solicitor at the end of a matter the success fee and ATE insurance premium, not the defendant.

The new requirements do however provide that although it is between a client and their solicitor to agree the level of the success fee, the maximum success fee that a solicitor can charge on basic costs remains at 100 per cent, but the legislation has introduced a cap of 25% on the amount which can be deducted as the success fee from the claimant’s damages in personal injury and clinical negligence claims.

Nevertheless the new rules do have some exceptions, where they do not apply to claims for damages in respect of diffuse mesothelioma proceedings, publication and privacy proceedings and insolvency work.

These changes have been brought about by s44 and s46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and the Conditional Fee Agreements Order 2013.

If a CFA or an ATE policy was signed by a client on or before 31 March 2013 the success fee and the ATE premium will be recoverable from the unsuccessful defendant and the Conditional Fee Order 2005 will continue to apply to those agreements.

In addition, personal injury and clinical negligence clients who enter into a CFA on or after 1 April 2013 will benefit from the qualified one way costs shifting (QuOCS).

QuOCS means that a claimant will not be liable for the defendants’ costs in the event that the claim is unsuccessful. However, all successful claimants will be at risk of an adverse costs order if they fail to beat a Part 36 offer to settle.

But claimants can lose the benefit of QuOCS, making them liable for the full extent of the costs in circumstances where the claim discloses no reasonable grounds for bringing the proceedings, if there is an abuse of the court’s process, if the claimant’s conduct (or a person acting on their behalf) is likely to obstruct the just disposal of the proceedings or If it is found in the claim on the balance of probabilities that the claim was fundamentally dishonest.

For further information call 0116 2999199