The Law Society model conditional fee agreement is not very well drafted. (Cue gasps of astonishment.)
Although, when I say Law Society model CFA, currently no such thing exists. The last model agreement was updated in 2014 and, even then, appears to have been a temporary job as the header to the document stated:
“This model agreement is in the process of being amended to take make it fully compliant with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. You should refer to those regulations before using this model.”
The agreement has now been removed from the Law Society website (apparently in July 2021) with a message stating:
“The Law Society’s model conditional fee agreement (CFA) is in the process of being reviewed, and so is not currently published.
Solicitors using an old version should be aware that it does not reflect all of the recent changes to legislation, or case law, that may affect the viability of CFAs.
The model CFA and guidance were last updated in 2014. The model is intended for use in personal injury and clinical negligence claims.
We will issue a revised version in due course, taking into account ongoing judgments from 2021.
Thank you for your patience in the meantime.”
Ignoring any issues with the previous Law Society model CFA not being up to date with the law (and one does wonder how well it reflects on the profession that the representative body for solicitors is unable to keep up to date with developments in the law), it contains basic drafting errors.
The body of the agreement states:
“Otherwise if you end this agreement before you win or lose, you pay are basic charges and expenses and disbursements. If you go on to win you also pay a success fee.”
This is written in commendably clear language that the average lay person should be able to understand. If the client ends the agreement early, the basic charges, expenses and disbursements are automatically payable (win or lose) at the point of termination. If the client then goes on to win the claim, they will be liable to pay the success fee in addition.
However, when you turn to the Law Society Conditions, that are attached to and form part of the model CFA, these state, under “paying us if you end this agreement”:
“You can end the agreement at any time. Unless you have a right to cancel this agreement under Schedule 3 and do so within the 14 day time limit we then have the right to decide whether you must:
- pay our basic charges and our expenses and disbursements including barristers’ fees but not the success fee when we ask for them; or
- pay our basic charges, and our expenses and disbursements including barristers’ fees and success fees if you go on to win your claim for damages”
Therefore, contrary to what is stated earlier in the agreement, the client is not automatically liable to pay basic charges and expenses and disbursements upon termination. At the point of termination, the solicitor is meant to elect one of the two options:
- Immediately get paid their basic charges, expenses and disbursements. If this option is chosen, the solicitor forgoes their right to recover a success fee if the claim is eventually won; or
- Wait until the conclusion of the matter and if the client wins the claim to then be paid their basic charges, expenses, disbursements and the success fee. It is implicit in this that if the case is lost, the solicitor is not entitled to be paid such costs (although is possibly entitled to be paid expenses and disbursements depending on how the agreement is drafted elsewhere).
Looking back on a very old version of the Law Society model CFA (from Cook on Costs 2000), the wording of the corresponding provisions are almost identical.
How does such a basic drafting error occur and why was it not spotted/corrected for over 20 years?