Civil Procedure and Litigation Funding

The contrast between backdated and retrospective Conditional Fee Agreement


The above refer to the type through which litigation fee can be met. Cost Monkey (2012) defines conditional fee agreements as “an agreement with someone who provides litigation or advocacy services which provides that person’s fees to be paid only in specified circumstances”. In layman’s language, this refers to a situation whereby a company takes the responsibility of covering the costs incurred by the attorneys handling a client’s case but be compensated should the case be won. Should this be the situation, it is the defendant who is supposed to pay. CFA is commonly referred to as a “no win no pay’ procedure, this is due to the fact that should the case  be lost, the cost incurred by the firm handling or paying for its litigation is not compensated by the client. On top of paying for litigation fee, the defendant is supposed to may additional fee to the client, which is known as success fee (Osborne, 2007). This is the amount the firm representing the client is supposed to gain from, albeit only a fraction, basing on the agreement. The law regarding CFA has been seen various regulations. For instance, various proceedings under which Conditional Fee Agreement is valid have been added or subtracted over time (Cost Monkey, 2012). For example apart from the following proceedings, all the others were valid under CFA, Criminal, Matrimonial Causes Act 1973, Domestic Proceedings and Matrimonial Proceedings Act 1976, Adoption Act 1976, Domestic Proceedings and Magistrates’ Courts Act 1978, Matrimonial Homes Act 1978, Matrimonial Homes Act 1983, Matrimonial and Family Proceedings Act 1984, Children Act 1989.

The period within which solicitors are legally required to be compensated determines whether the CFA is backdated or retrospective (Cownie et al, 2007). A retrospective Conditional Fee Agreement is that one that covers the work that was done after it was officially signed. Williams (2005) notes that, “It is commonplace for solicitors to enter CFAs and CCFAs which are stated to cover work carried out before the agreements were made”. However he continues to observe that not all solicitors seek payment for job done during pre-execution. Gibbs (2011) further demonstrates the lack of a concrete take in this regard by observing that, “Despite recoverable success fees being with us for over a decade, there has been a surprising lack of guidance surrounding the issue of retrospective conditional fee agreements(CFAs) and  recovery of success on work undertaken before the CFA is entered into. He goes on to observe the various positions that have been taken by various judges as far as the topic is concerned. On the other hand as briefly implied by the above discussion, backdated conditional fee agreement refers to the payment of work that has already been performed. “It would be in the interests of clients if CFAs could be applied retrogressively to work that has already been performed, if their solicitors were willing to agree on that course” (Williams, 2012). This channel has not been fully exploited due to the fact that it doesn’t have strong grounds in law as he continues to say that, “whether CFAs can be backdated in this way, and success fees claimed on the past costs, has been relatively little explored. That may stem from the Law Society specimen CFA, which is not retrospective”

The two scenarios can are quite shaky especially  inBritish law (Green, 2005). As above stated, CFAs are rarely backdated due to the fact that, solicitors don’t think they are well supported in law. Williams (2005) discusses however the cases when backdating can be considered. He argues that though there are many difficulties pertaining recovery of fees in regard of work done before the execution of a case there is no special law that bars CFAs to be backdated in order to cover the job done before the agreement was signed. He goes on to comment that it is fair to have this work aid for due to the simple fact that even before the two parties put pen to paper, the solicitors have already drawn strategies, albeit in their minds, on the necessary steps to be taken to ensure that they beat the opponent. This strategizing and considering is what is being paid for. He however notes that despite the fact that this can be done, it is not a far gone conclusion that further liabilities which flow from that can be recovered inter partes. For this to happen, one should clearly notify the paying party of the possibility of him paying additions in liability. Failure to do this, the court may not be as willing to allow this to happen. Neat Legal Services (2011) for instance quotes an example of this situation in a case where a firm wanted CFA backdated. John Holmes v Alfred McAlpine Homes (Yorkshire).It observes that according to the attendance note presented, the CFA had been put to paper on 25th August 2000 though the agreement date was noted on page one of the agreement to have been on15th July 2000. It was also noted that costs were to be covered “for work done from now until this agreement ends. The court clarified that the usual meaning of “now” refers to the time the CFA was signed and that due to the fact that the solicitor had not sought to clarify or elaborate otherwise, that’s how the claimant had understood. Neat Legal Services (2011) note that,

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“          The judge commented that backdating of documents, as was done in this case, is generally wrong. He indicated that it is wrong to attempt to give an agreement retrospective effect by backdating it and that if the parties are agreeing that a written agreement should apply to work done before it is entered into, it should be correctly dated with the date upon which it is signed and expressed to have a retrospective effect”

When it comes to retrospective conditional agreement however, McAulay (2009) although the law has not fully clarified on it, many have considered it in various cases underlining its significance among practicing practitioners. He is however keen to observe matters of time in this whole regard stating that on signing this type of agreement, the client knows what it entails and the costs that are going to be covered from the time of signing the agreement. He thus observes that it would not be prudent for the costs incurred before the agreement is signed. This is however restricted to the success fee as other base costs could be backdated.

Giving of Notice is of Funding is very essential as the success fee will not be recoverable until thus. The case being settled pre-issue would be an exception to this because as McAulay (2009) points out, “the obligation to give notice of funding in respect of a CFA under the rules of Court only arises upon the issue of the claim”. However when considering the amount of success fee to be given, the court in calculating it observes the price of risks that had been taken from the time the agreement was signed and in no circumstance does it consider the risks taken prior to the retrospective CFA. McAulay (2009) also observe that CFA must always act to replace an agreement put in place before between the client and the solicitors. Failure to do this would be termed as a breach of the law. Unlike in backdating CFA, where work done before the agreement is compensated, in retrospective, it is work done  between when one is made aware of the pending notice of funding and when it is literally given that might be considered for compensation

Whether backdated or retrospective, conditional fee agreement has various benefits. According to Bermans Articles (2010) as a client, “your opponent will know that you are litigating without having to pay your own solicitors”. This is very important as it will weigh in your opponent’s psychology that a legal firm somewhere has the confidence that there are high chances of you winning the case. No firm will be willing to represent someone on a case that it has no confidence of winning on A CFA account as it will be making unnecessary losses. Through CFA as Slapper and Kerry (2011) contend, one does not risk much. In fact, all the risks involved are much transferred to the people or firm handling the case. The client does not have to pay anything especially when it involves insurance. In this case, the client just relaxes and waits for the outcome of the cases.

In conclusion the main difference between the two types in one may choose to term a conditional fee agreement lies on the period when the real work commences as legally signed between the client, his solicitors and to a  certain extent the defender of the case.

Detailed assessment of costs

According to the UK law, Definitions and application (43.2-3), “costs include charges, disbursements, remuneration and reimbursement allowed to a litigant in person under rule 11.45.”

There are various types of costs as defined by the constitution. Fixed costs for instance are defines as “the amounts which are to be allowed in respect to the advocates’ charges in the circumstances set out in Chapter 2.”The law goes on to state clearly what is meant by ‘funds’, this according to law “includes any estate property held for the benefit of any person or class of person and any fund to which a trustee or personal representative is entitled in his capacity.”

Detailed assessment on the other hand is defined as “the procedure by which the amount of costs is decided by a costs officer in accordance with Chapter 4”.

The receiving party on the other hand refers to the person entitle or liable to be paid the costs while the paying party is that party that is supposed to pay up the costs. As earlier noted, a firm can decide to take up the costs for its client and get compensated by the defeated opponent through conditional fee agreement, which however must be shown to the defendant to notify him or her of the risks that are being taken by the litigant.

On the other hand, summary assessment is defined as “the procedure by which the court, when making an order about costs, orders payment of a sum of money instead of fixed costs or detailed assessment.

According to Chapter 4 of the UK constitution, article 47, “The general rule is that the costs of any part of proceedings are not to be assessed by the detailed procedure until the conclusion of the proceedings, but the court may order them to be assessed immediately”. The last statement is of significance in that there are situations whereby, a detailed assessment of costs can be preferred to a summary assessment. The following are the instances that this can occur under two different parts,

Under Part 10 for

  • Judgment on admission
  • Summary judgment; or
  • An instalmentorder;or
  • Under Part 12

Documents given to the paying party during detailed assessment proceedings

It is of grave importance that the solicitors representing a client are equipped with various documents. As earlier noted in cases involving CAFs for instance, the defendant must be updated on this so that it doesn’t bring a problem during payment. There are various documents as stipulated by the law that the paying party must be given during detailed assessment proceedings. The file containing the documents must have the following documents all arranged chronologically.

First and foremost, the file must contain case statements. The case statements should show all directions and orders as given by the court in regard to the proceedings in question.

Legal aid certificates and all their amendments should be given. Accompanying these should be notices of discharge or revocation and specific legal aid authorisations.

Equally important should be accounts and disbursements. These gives evidence in regard to expenses incurred during litigation process.

Reports and opinions of medical and other experts should be next on line. These apply mostly during a case that seeks to compensate a client after bodily harm that might have been caused or if the defendant might want to know the medical condition of the person accusing him or her.

Fifth among these are the advocate’s correspondence and attendance notes. The law also requires the paying party to be given any relevant terms of business agreement between the advocate and his client.

Last but not least are any other relevant papers that are deemed important to the proceedings at hand.

List of References

  • Berman Article (2010) Conditional fee agreement (CFA) Available at: http://www.bermans.co.uk/content.php?content.206 (Accessed on 11 March, 2013)
  • Constitutional cost Acts (UK)
  • Costs Money (2012) Conditional fee agreement.Available at: ttp://www.costsmonkey.co.uk/html/funding_arrangements.html. (Accessed on 11 March 2013)
  • Cownie, F., Bradne, A. Burton M (2007)English legal systems in context. Oxford: Oxford University Press.
  • Gibbs, S (2012) Is it possible to recover retrospective success fee. Available at: http://www.gwslaw.co.uk/wp-content/uploads/2012/10/Solicitors-Jounral-March-2012.pdf (Accessed on: 10 March 2013)
  • Green, S (2005) Conditional fees: A Guide to funding litigation. London: Law Society.
  • McAulay, M (2009) Retrospective conditional fee Agreements. Available at: http://www.clarionsolicitors.com/blog/retrospective-conditional-fee-agreements (Accessed on 10 March 2013)
  • Osborne, C (2007)Civil litigation 2007-2008. Oxford: Oxford University Press.
  • Slapper, G. and Kelly, D. (2011)The English legal system. New York: Routledge Publishers.
  • Williams, B. ‘Backdating conditional fee agreements’. Essex Street , P 39-47.

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