Conditional Fee Agreement Work on Public Access

1. By s.58(3)(c) Courts and Legal Services Act 1990 (as substituted by the Access to Justice Act 1999) a conditional fee agreement (“CFA”) is lawful only if it complies with such requirements as may be specified by the Secretary of State.

2. Pursuant to that section the Conditional Fee Agreement Regulations 2000 (SI 2000 no.692) (“the 2000 Regulations”) specified detailed requirements for the contents of CFAs and as to information which was to be given to a client prior to making a CFA.

3. However, many members of the Bar considered that the 2000 Regulations were deficient in failing to require clients to be warned that there is a risk in any case where a CFA has been made of a conflict of interest arising between client and lawyer. This is especially likely to occur if and when a low offer in settlement is made: the lawyer then may have a strong incentive to encourage acceptance, so as to avoid the risk of no payment, and indeed to secure up to double fees, whereas the offer may be at a level which a client would not normally be advised to accept.

4. As is well known, these Regulations spawned much satellite litigation in which defendants, who often consider it unjust that they should pay up to double costs, challenged the lawfulness of CFAs which arguably failed to comply with the Regulations.

5. In the hope of reducing such satellite litigation, with effect from 1 November 2005 the 2000 Regulations were revoked, and no new regulations were put in their place.

6. The specific requirements of the 2000 regulations had by that date been incorporated into the Law Society’s Solicitors Costs Information and Client Care Code. Therefore, the revocation of the 2000 Regulations was regarded as altering the mode of enforcement of the requirements rather than their substance: they would in future fall within the purview of Law Society discipline rather than determination by a Cost Judge.

7. When making this change no thought appears to have been given by the Department of Constitutional Affairs to the fact that since July 2004 it had been possible for a barrister to be instructed directly by a member of the public, and that it was theoretically possible for a barrister acting on public access to make a CFA. This oversight may well be attributable to the extreme rarity of a CFA being made by a barrister with a public access client, if, indeed, such a CFA has ever been made at all.

8. Nonetheless, since a CFA is at least theoretically possible between a barrister and a public access client thought has to be given to the manner in which such CFA should be made. This paper sets out the thinking of the Bar Council’s Access to the Bar Committee (the “ABC”).

9. The ABC is part of the representational, rather than the regulatory, side of the Bar Council: therefore, this paper is for information only and has no binding effect.

10. The ABC considers that any barrister making a CFA with a public access client should,

a. Comply with the requirements as to the formalities of such an agreement set out in the 2000 Regulations with such necessary modifications as are required by the circumstance of the agreement being made by a barrister rather than a solicitor;

b. Provide the client, prior to the making of the agreement, with the information required by the 2000 Regulations;

c. Provide the client, prior to the making of the agreement, with the information as to costs, mutatis mutandis, contained in the Law Society’s Costs Information and Client Care Code and in the Law Society leaflet for clients “Conditional Fee Agreements: what you need to know”;

d. Warn the client that there is a risk in any case where a CFA has been made of a conflict of interest arising between client and lawyer;

e. Advise the client that making a CFA with a solicitor may have advantages for the client over a CFA direct with a barrister by reason of the procedures for independent assessment of solicitors’ fees.

11. With regard to the warning of conflicts, the ABC takes the view that the mere fact that other regimes relating to CFAs provide, in the opinion of barristers, insufficient protection for clients, is no reason why the Bar’s practice should also be deficient.

12. The ABC expects that barristers will often advise clients who want to make a CFA to place their instructions via a solicitor. That is because amongst the information which the 2000 Regulations stipulated to be given to a client was information whether other methods of financing were available, and whether a contract of insurance was appropriate; if a contract of insurance was recommended, certain further explanation must be given. Many barristers will not feel themselves to be in a position to provide such information or explanation.

13. Barristers will have in mind that under the Public Access Rules they must consider, before accepting a case on public access, whether it would be in the interests of the client to instruct a solicitor. Unless a barrister feels confident that he can provide all the appropriate information and explanations, he is, therefore, unlikely to be involved in making a CFA on public access, even if, as a matter of business decision, he is willing to undertake a particular case on a CFA.

14. Paragraphs 10 and 11 of this document extend to conditional fee agreements which do not contain any success fee, but by the nature of things the requirements are then more limited. The requirements of the 2000 Regulations for the provision of information are more extensive in the case of success fee CFAs than of CFAs without a success fee. Nor does CPR 44.15 (as to giving notice of a CFA to an opposing party) apply to a CFA without a success fee. The Bar Council is aware that barristers sometimes make CFAs without a success fee in situations where as an act of kindness to an impecunious client they are willing to act without fee, but see no reason why they should not recover normal fees in the event of securing an order for costs against an opposing party. The Bar Council attaches a high priority to extending access to justice, and, subject to necessary safeguards, is not discouraging such arrangements.

15. This document applies, with necessary modifications, to CFAs in which liability for only part of the barrister’s fees are subject to the condition, in the same way as CFAs in which the whole of the fee is so subject.