Making conditional fee agreements work

Practitioners involved in litigation will be aware of the numerous challenges to conditional fee agreements (CFAs).

In recent weeks, two issues have been before the courts, the Accident Group litigation (see [2002] Gazette, 5 December, 1), and the alleged formal defect in the Law Society's interim model agreement, which was issued in April 2000 and replaced in July 2000 (see [2002] Gazette, 5 December, 4).

The present Society model agreement, available on the Society Web site, is not subject to challenge to the best of the Society's knowledge.

Judge Tetlow held that the interim model CFA, used in the case of Hollins v Russell, did not meet the requirements of regulation 2(1)(d) of the Conditional Fee Agreement Regulations 2000 and was thus unenforceable.

He handed down judgment in Manchester County Court on 28 November 2002.

The Society had intervened in this case, heard in Oldham County Court, which was an appeal to the circuit judge by the paying party against a decision of the district judge that the CFA was valid.

A transcript of the judgment is not yet available.

The effect of the decision is not binding on other courts, although it is persuasive and will no doubt be quoted extensively by paying parties.

The Society is concerned about a challenge to any of its model agreements, and is now to seek permission to appeal to the Court of Appeal.

The Society will consider intervening in other cases which raise points of principle of wide application to the operation of access to justice under conditional fees.

There are currently several cases on alleged formal defects and similar points being heard in County Courts.

It is important that solicitors continue to keep the Society informed as to cases in which they are involved, so that the Society can continue to monitor the situation and base decisions on the best possible information.

The Society's practice advice service can provide a factsheet which gives an up-to-date outline of various points in relation to CFAs currently being taken.

This sheet is updated regularly as this is a fast-moving area.

Solicitors concerned that they may have used an unenforceable agreement may want to consider whether they alter the agreement to rectify a mutual mistake, amend the agreement or replace it with a fresh agreement.

There are currently no authoritative decisions from the courts as to whether this action will be effective retrospectively.

If this course of action is followed, clients must be fully informed of the reasons for the changes and their effects and told that they may seek independent advice about any aspect that concerns them.

Furthermore, the rules of court - see the Civil Procedure Rules 1998, rule 44.15 and costs practice direction at section 19 - set out the information to be provided to an opponent and the timing and method by which this should be done.

Regulation 6 of the CFA regulations also details additional steps which must be taken when agreements are changed or replaced.