Conditional Fee Agreements Regulations

Since 1 April 2013, compensation or damages agreements (DBAs) have been allowed for litigation (i.e. legal proceedings or arbitrations) in England and Wales. This means that lawyers can execute disputes and arbitrations in that jurisdiction in return for a portion of the damages. In September 2015, the Civil Justice Council issued a report and recommendations following a review of the rules for ADBs, which were implemented at the request of the Ministry of Justice. The working group was led by Professor Rachael Mulheron of Queen Mary University of London and consisted of Maura McIntosh of Herbert Smith Freehills. The report contains a total of 45 recommendations, including a series of technical amendments to clarify regulations and amendments allowing defendants to use the DBA. To date, the task force`s recommendations have not been followed. Until April 2013, lawyers could recover a “success tax” from the opposing party if they won the case. However, the government amended these rules and removed the requirements imposed on the other party to pay for the success fees. Law firms now require a percentage of the client award to cover the costs of their legal services and expertise. On February 7, 2019, the government released the results of its review following the implementation of Part 2 of the LASPO, with legislation implementing the introduction of the DBA (as well as other aspects of the Jackson reforms).

The review indicates that almost all interviewees across the spectrum agreed that DBAs were rarely used and that DBA regulations should be revised to ensure that DBAs are a more viable funding method for more cases. Among the specific concerns that would have been expressed about the regulations were the lack of a reasonable payment for work in the process of termination; Uncertainty about early termination and the principle of compensation; Uncertainty about the eligibility of “sequential” hybrid DBAs; and the payment of legal fees. Most respondents would have supported the findings and recommendations of the Civil Justice Council working group. However, over time, not all of the effects of these agreements have been positive and circumstances have occurred, whether the legal fees under the CFA have affected the amount claimed or the amount of the proceedings. As a result, these provisions changed from 6 April 2013 with the introduction of the Law on Legal Assistance, Conviction and Punishment of Offenders in 2012 (“LASPO”), which came into force in early April 2013. A conditional pricing agreement must be written and must relate specifically to the conditions that affect it.