Fee Sharing and CFA's

Guidance from the Professional Standards Committee (now called the Professional Practice Committee) issued in 2002

The Professional Standards Committee has been asked to provide advice for barristers who are considering entering into some form of agreement to share fees with other barristers in order to spread the risk of regularly undertaking work on a conditional fee basis.

The PSC does not believe that a simple fee sharing arrangement would of itself amount to a partnership assuming that it does not involve the sharing of responsibility for the work done. The Code of Conduct, therefore, does not prohibit barristers from entering into such arrangements. Nevertheless, substantial ethical issues arise and such arrangements will restrict considerably the work which barristers can undertake.

The ethical difficulties arise over conflicts of interest between the members of a group of barristers who enter into a fee-sharing arrangement and their clients in situations where members of the group are instructed to appear for clients with opposing interests. If fees are shared, barristers who are parties to such an arrangement will have an interest in the success of fellow members particularly if (a) their opponent acts on a CFA and they are being paid on a conventional fee basis or (b) both are instructed on a CFA but the CFA of one is more advantageous than that of the other. While it is possible for barristers to act in cases of conflict of interest if they have the fully informed consent of their clients, there will usually be substantial difficulties connected with confidentiality about obtaining such consent. In particular, in order to give such consent, the client will need to know whether the barrister on the other side is acting on a CFA and, if so, the terms of that agreement.

The PSC provides advice on the following 4 situations which cover those likely to arise. In each case, A and B are barristers who are parties to a fee sharing arrangement.

Case 1: A is instructed in a case on a conventional fee basis. Can B accept instructions also on a conventional fee basis to act for an opposing party? In principle there is no objection to this. The difficulty that is likely to arise, however, is that neither barrister will ordinarily know the basis on which the other is instructed and it would be a breach of confidence for them to be told. Without that information neither would be able to judge whether a conflict existed. In these circumstances, unless both clients are prepared to consent to the other being informed of the basis on which they are paying their barrister, B cannot act.

Case 2: A has been instructed on a CFA. Can B accept instructions on a conventional fee basis to act for an opposing party? In these circumstances, A would not be put in a position of conflict since he would have no financial interest in the success of B's case. Nevertheless, B would have an interest in the success of A's case and, unless he is able to inform his client of the terms on which A is instructed and the client gives an informed consent to B acting notwithstanding his financial interest, he should not accept the instructions.

Case 3: A has been instructed on a conventional fee basis. Can B accept instructions on a CFA? While B does not have a financial interest in the success of A’s case, his acceptance of instructions would give A such an interest in the success of B’s case and so require A to withdraw (unless A’s client was able and willing to give informed consent to A continuing to act). In the PSC's view, it would be unacceptable for A’s client to be placed in such a situation through B's acceptance of instructions, and the instructions should not be accepted.

Case 4: A has been instructed on a CFA. Can B accept instructions on a CFA? On the basis of the analysis of cases 2 and 3, it cannot be appropriate for B to accept instructions in such a case.

The result of this guidance is that, where a fee sharing arrangement is entered into, the parties to the arrangement will rarely, if ever, be able to accept instructions to appear on opposite sides in cases falling within the scope of the arrangement.