New conditional fee agreement (CFA) regulations were laid before Parliament on 10 March, to come into force on 1 April 2000.

They replace the 1995 regulations, which will then be revoked.

On that day, part II of the Access to Justice Act 1999 comes into force, permitting success fee and insurance premium recovery between parties.However, the necessary rules of court, setting out the criteria for assessing these recoveries, have not yet been made.

The latest information is that they will not be ready until at least May.

Therefore, many practitioners might want to await those rules before signing new agreements, despite the stockpiling of cases that might result.

The Law Society's conditional fees task force, chaired by Council member Michael Napier, had prepared a revised model agreement for use in personal injury cases to take account of the Woolf reforms, practitioners' experiences and recent consumer research.

Publication was suspended when it became clear that the government would prescribe new requirements.

The lateness of publication of the new regulations has made timely preparation of a new agreement extremely difficult.The Society will not publish a new model agreement until the rules of court are settled.

It will then seek, as before, a clear English accreditation.

Additional precedents for other areas of conditional fee work will also then be prepared.

However, as there will be cases in which practitioners will want to offer a CFA at this stage, perhaps for limitation reasons, a draft will be published which incorporates the detail of the regulation requirements into the revised CFA which had previously been planned.

The current edition of the Law Society's model agreement should not be used for new cases after 1 April 2000, as it will be unenforceable.Main effects of the new regulationsRegulation 4 makes considerable changes to the requirements for information to be given to clients before a CFA is signed.

All of that information must be given orally to the client, and some must also be given in writing.

Remember that under section 27 of the Access to Justice Act, a CFA covers any arrangement where certain fees are payable only in specified circumstances.

Any agreement of this nature which fails to comply with the regulations is unenforceable.

So, Thai Trading arrangements, whether acting speculatively without a success fee or at a discounted rate in a losing case, become CFAs.The Law Society has pointed out to the Lord Chancellor's Department that Thai Trading-type arrangements are frequently used by bulk purchasers of legal services, and that the Solicitors' Costs Information and Client Care Code 1999 does not require information to be given in every single case to regular clients.

The definition of a client in regulation 1 can include both the 'lay' client and the funder, but it is not made clear whether the specified information needs to be supplied to one or both.Regulation 3 prescribes new requirements for the CFA in success fee cases.

In particular, it requires the CFA to limit the level of the success fee payable by the client to that allowed by the court on the assessment (presumably be tween the parties, although this is not specified) where the level is reduced as unreasonable.

Note also the need to specify the reasons for setting the particular success feeFurthermore, the CFA must also reduce the success fee to the amount agreed with the other party (for example, where costs are settled without an assessment) unless the court allows the full amount specified in the CFA.

While the consumer protection impetus for the benefit of uninformed clients is clear, CFAs will also be used by sophisticated clients, particularly in commercial litigation.

What will happen under regulation 3(2)(C) where the client without a financial interest instructs a solicitor to accept an offer in respect of the success fee?Trade unions will be able to use a separate scheme under the Access to Justice Membership Organisation's Regulations 2000 SI 693.

Where they indemnify members for costs liabilities, they will be able to recover in successful cases an additional amount to cover this 'self insurance' element.Regulation 3(1) requires reasons to be given for setting the percentage increase at a stated level.

It will also be necessary to identify how much of that relates to the postponement of payment -- the financing element.

The government has concluded that such an element should not be recoverable against the other party.

It remains to be seen how the civil procedure rules committee will implement that policy, yet at the same time allow it to be recovered from the client, notwithstanding the restrictions in Regulation 3(2).

Presumably, they will want to avoid creating a massive demand for detailed assessments in all conditional fee cases.THE CONDITIONAL FEE AGREEMENTS REGULATIONS 2000The Lord Chancellor, in exercise of the powers conferred on him by sections 58(3)(c), 58A(3) and 119 of the Courts and Legal Services Act 1990(a) and all other powers enabling him hereby makes the following regulations:-Citation, commencement and interpretation1.(1) These regulations may be cited as the Conditional Fee Agreements Regulations 2000.(2) These regulations come into force on 1 April 2000.(3) In these regulations: 'client' includes, except where the context otherwise requires, a person who:(a) has instructed the legal representative to provide the advocacy or litigation services to which the conditional fee agreement relates; or(b) is liable to pay the legal representative's fees in respect of those services; and 'legal representative' means the person providing the advocacy or litigation services to which the conditional fee agreement relates.Requirements for contents of conditional fee agreements: general2.(1) A conditional fee agreement must specify:(a) the particular proceedings or parts of them to which it relates (including whether it relates to any appeal, counterclaim; or proceedings to enforce a judgment or order),(b) the circumstances in which the legal representative's fees and expenses, or part of them, are payable;(c) what payment, if any, is due:(i) if those circumstances only partly occur,(ii) irrespective of whether those circumstances occur, and(iii) on the termination of the agreement for any reason; and(d) the amounts which are payable in all the circumstances and cases specified or the method to be used to calculate them and, in particular, whether the amounts are limited by reference to the damages which may be recovered on behalf of the client.(2) A CFA to which regulation 4 applies must contain a statement that the requirements of that regulation which apply in the case of that agreeme nt have been complied with.Requirements for contents of CFAs providing for success fees3(1) A CFA that provides for a success fee:(a) must briefly specify the reasons for setting the percentage increase at the level stated in the agreement; and(b) must specify how much of the percentage increase, if any, relates to the cost to the legal representative of the postponement of the payment of his fees and expenses.(2) If the agreement relates to court proceedings, it must provide that where the percentage increase becomes payable as a result of those proceedings, then:(a) if --(i) any fees subject to the increase are assessed; and(ii) the legal representative or the client is required by the court to disclose to the court or any other person the reasons for setting the percentage increase at the level stated in the agreement, he may do so:(b) if --(i) any such fees are assessed; and(ii) any amount in respect of the percentage increase is disallowed on the assessment on the ground that the level at which the increase was set was unreasonable in view of the facts which were or should have been known to the legal representative at the time it was set, that amount ceases to be payable under the agreement, unless the court is satisfied that it should continue to be so payable, and(c) if --(i) sub-paragraph (b) does not apply; and(ii) the legal representative agrees with any person liable as a result of the proceedings to pay fees subject to the percentage increase that a lower amount than the amount payable in accordance with the CFA is to be paid instead, the amount payable under the conditional fee agreement in respect of those fees shall be reduced accordingly, unless the court is satisfied that the full amount should continue to be payable under it.(3) In this regulation 'percentage increase' means the percentage by which the amount of the fees which would be payable if the agreement were not a conditional fee agreement is to be increased under the agreement.Information to be given before conditional fee agreements made4.(1) Before a conditional fee agreement is made the legal representative must -(a) inform the client about the following matters; and(b) if the client requires any further explanation, advice or other information about any of those matters, provide such further explanation, advice or other information about them as the client may reasonably require.(2) Those matters are:(a) the circumstances in which the client may be liable to pay the costs of the representative in accordance with the agreement;(b) the circumstances in which the client may seek assessment of the fees and expenses of the representative and the procedure for doing it;(c) whether the legal representative considers that the client's risk of incurring liability for costs in respect of the proceedings to which agreement relates is insured against under an existing contract of insurance;(d) whether other methods of financing those costs are available, and, if so, how they apply to the client and the proceedings in question,(e) whether the legal representative considers that any particular method or methods of financing any or all of those costs is appropriate and, if he considers that a contract of insurance is appropriate or recommends a particular such contract(i) his reasons for doing so; and(ii) whether he has an interest in doing so.(3) Before a CFA is made the legal representative must explain its effect to the client.(4) In the case of an agreement where:(a) the legal representative is a body to w hich section 30 of the Access to Justice Act 1999(a) (recovery where body undertakes to meet costs liabilities) applies; and(b) there are no circumstances in which the client may be liable to pay any costs in respect of the proceedings, paragraph (1) does not apply.(5) Information required to be given under paragraph (1) about the matters in paragraph (2)(a) to (d) must be given orally (whether or not it is also given in writing), but information required to be so given about the matters in paragraph (2)(e) and the explanation required by paragraph (3) must be given both orally and in writing.(6) This regulation does not apply in the case of an agreement between a legal representative and an additional legal representative.Form of agreement5(1) A conditional fee agreement must be signed by the client and the legal representative.(2) This regulation does not apply in the case of an agreement between a legal representative and an additional legal representative.Amendment of agreement6.

Where an agreement is amended to cover further proceedings or parts of them:(a) regulations 2, 3 and 5 apply to the amended agreement as if it were a fresh agreement made at the time of the amendment; and(b) the obligations under regulation 4 apply in relation to the amendments in so far as they affect the matters mentioned in that regulation.Revocation of 1995 Regulations7.

The Conditional Fee Agreements Regulations 1995(b) are revoked.Explanatory note (not part of regulations)Section 58(1) of the Courts and Legal Services Act 1990 provides that a conditional fee agreement is not unenforceable if it satisfies certain conditions.

These include conditions to be specified in regulations under section 58(3) of that Act.

Regulations 2 and 3 specify those conditions.

Regulation 2 applies to all conditional fee agreements.

Regulation 3 sets out further requirements applying only to agreements which provide for success fees.Section 58A(3) enables the conditions which may be prescribed for CFAs to include requirements for the person providing advocacy or litigation services to have provided prescribed information before the agreement is made.

Regulation 4 imposes such a requirement and specifies what information is to be given.

It does not apply where the agreement is between legal representatives.Regulation 5 requires that agreements other than those between legal representatives must be signed by the client and the representative.Regulation 6 provides for similar requirements to apply as respects amendments of agreements.These regulations replace the Conditional Fee Agreements Regulations 1995, which are revoked.