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Conditional fee agreements were supposed to make access to justice easy, but instead they have thrown up a host of extra issues - and litigation - for lawyers. By Paul McNeil
The technical requirements of the Conditional Fee Agreements (CFA) Regulations are so demanding, it is no surprise that defendant insurers have begun to take a tough stance on the legality of such agreements since their introduction. The benefits of doing so are very lucrative - if successful, insurers pay no costs as, effectively, there is no retainer between the claimant and their solicitor. This tactic became even more popular when the CFA Regulations 2000 allowed the claimant to recover success fees from the defendants.
The resulting satellite litigation has meant sleepless nights for many a claimant lawyer. Since the comforting decision in Hollins v Russell (2003), which intended to quash such actions, unbelievably the courts have upheld that a CFA agreement is unenforcable in the following circumstances:
* Where the claimant's solicitor failed to properly 'consider' whether there was a legal expenses policy available. In Culshaw v Goodliffe [2003] the solicitor had asked the client who had said no, but later such a policy was found.
* In similar circumstances to Culshaw where no such policy existed (for example, Samonini [2005]). The regulations require the solicitor "to carry out a careful investigation of alternative sources of insurance".
* Where the CFA failed to specify how much of the success fee related to the postponement of fees (Spencer [2004]).
* Where the solicitor failed to advise on the availability of public funding (Hughes [2005]).
The Government introduced CFAs in 1995 as a counter-balance to the abolition of legal aid in personal injury cases. The 'new horizon' was that claimants would be free...