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What is a CFA – Conditional Fee Agreement

In layman’s terms CFA means Conditional Fee Agreement. In essence they were born out of the Legal Services Act 1990 which was introduced by the courts in order to deal with personal injury cases.

The first CFA’s to be introduced were purely for the purpose of dealing with personal injury cases and the first to be used came into force in 1995. With CFA’s lawyers are only able to claim their fees if they are success in winning the clients personal injury compensation claims case, if they fail in winning the case they forfeit the right to recover any of their costs or fees. Unfortunately any costs over and above the basic fees payable out of the win could not be claimed or recovered from the losing party therefore these costs were taken back from the successful claimant.

These extraordinary costs included any ATE (After the Event Insurance) that might have been necessary to take the case forward and solicitor’s success fees. In many cases the successful claimant walked away with nothing or very little. In 1999 the Access to Justice Act made it possible for these costs to be recoverable from the losing party, in most cases the insurance companies. It was around this time and following this judgment that an explosion in the amount of claims management companies occurred.

With an estimated number of over 400 claims management companies being in existence in the UK is was no wonder that intervention was again required in order to quash the ever growing claims culture and in addition to little kickback from the lawyers in allowing rapid growth of claims management companies some order was required – the Compensation Bill

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