The Issues: The Defendants challenged the enforceability of a CFA signed before 1 November 2005, by reference to the Conditional Fee Agreements Regulations 2000 (the 2000 Regulations) and in particular to Regulation 4(2)(e)(ii) relating to the requirement to inform the client of any “interest” the solicitor might have in recommending a particular insurer. Those representing the Claimant argued that the CFA was in fact a ‘CFA Lite’ in accordance with The Conditional Fee Agreement (Miscellaneous Amendments) Regulations 2003 (the 2003 Regulations), which did not require compliance with Regulation 4 of the 2000 Regulations.
Held: A CFA Lite is defined in Regulation 3A of the 2003 regulations, and is:
“.... a conditional fee agreement under which, except in the circumstances set out in paragraph (5), the client is liable to pay his legal representative's fees and expenses only to the extent that the sums are recovered in respect of the relevant proceedings, whether by way of costs or otherwise.”
In this case, i t did not appear that the Claimant’s solicitor had intended to form a CFA Lite with the Claimant as it was in a format recommended in 2001 and it purported to be an agreement complying only with the 2000 Regulations. Nevertheless, the Court formed the view that the question of whether a CFA is a CFA Lite within the 2003 Regulations depends on the construction of all the arrangements made between the solicitor and the client, including those incorporated in any accompanying documentation, such as a ‘Rule 15’ letter (para 57).
In this instance the Client Care letter stated amongst things that:
“.....that there will be no deduction from your damages or a bill for you to pay if any of our own costs are unrecovered.”
Taking the Client Care letter account, the Court concluded that so far as the Claimant was concerned, the agreement was that there would be a waiver of costs, except to the extent that there was recovery of costs from either the other side or an insurance policy, and therefore she had no liability for costs unless she withdrew instructions. Therefore the CFA was indeed a CFA Lite in accordance with the 2003 regulations (para 57).
In the circumstances Regulation 4 of the 2000 Regulations did not apply and the CFA remained enforceable.
Comment: This is a helpful ruling on CFAs entered into before 1 st November 2005. The CFA Regulations were repealed after this date, so none of the points in this decision are relevant to CFAs signed after that date, but this decision may be helpful in ‘saving’ pre 1 November 2005 CFAs which are being challenged on the basis of a breach of the 2000 Regulations. Claimant’s solicitors who are faced with such a challenge should look carefully at the entirety of their agreement with the client including the Client Care Letter to see whether, in reality, a CFA Lite has been formed.