25% cap on damages in CFAs

It was previously understood that the 25% cap on damages, excluding damages for future care and loss, that can be taken from clients in personal injury claims would include any success fee charged by a barrister also acting under a CFA. This would, in theory, have avoided the situation where the client might lose 75% of their damages if there was a solicitor, junior and leading counsel all acting under CFAs.

The new Law Society Model CFA includes, what is presumably intended to be (as it is in square brackets) an optional clause:

“The maximum limit includes any success fee payable to a barrister who has a CFA with us.”

but does not explain how such a cap would be split with counsel and it would be interesting to see how the CFA with the barrister would be drafted to govern this.

However, now we have the Conditional Fee Agreements Order 2013 which contains no such restriction. When read in conjunction with the Courts and Legal Services Act 1990 (as amended) the 25% cap simply applies to “a conditional fee agreement”. There is therefore nothing to stop a client losing 75% of their damages in the situation given above.

Indeed, the Order does not even achieve the aim of limiting the amount any given legal representative can charge. There appears to be nothing to stop a firm of solicitors entering into one CFA that covers pre-issue work, a second CFA to cover work from the date of issue to the date of listing for trial and a third CFA to cover the period from listing to trial, with each having the 25% cap. If you then add in junior and senior counsel you could have a client liable to pay out 125% of their damages by way of success fee.

So much for consumer protection if that is what the Order was designed to achieve.