I have been looking into ways that legal claims are funded for my sister but am a little confused. What is the difference between conditional fee agreements and contingency fee agreements?
Gary Balfrey, by e-mail
When a solicitor acts for a client there needs to be a funding agreement between the solicitor and the client. Both the agreements you mention are no-win, no-fee agreements, meaning if the claim fails you pay nothing. Contingency fee agreements are based on a contingency being met – the contingency being winning the case whereupon a percentage of compensation is paid to the solicitor in costs. These agreements tend to be used in claims against the Criminal Injuries Compensation Authority or the Motor Insurers Bureau where those bodies only pay limited legal costs.
Conditional Fee Agreements are the norm for standard road traffic accident claims whereby the other side’s insurer will pay some of the legal costs and the client pays a success fee to the solicitors.
It used to be the case that the other side had to pay the legal costs and the success fee but the Government changed this in 2013 to make claimants partly responsible for legal costs to try and clamp down on what it believed was a compensation culture. When they passed the onus of paying a success fee to claimants they also increased the amount of compensation an accident victim receives for his/her injuries, which went some way to mitigating the impact of having to pay a success fee.