How a Conditional Fee Agreement Works
Conditional Fee Agreements (CFAs) — the formal legal term for “no win no fee” arrangements — are the dominant funding model for UK personal injury claims. Under a CFA, the solicitor handles your case without upfront fees: if your case loses, you pay no solicitor’s fees (subject to specific conditions); if your case wins, you pay the solicitor’s base costs from your damages plus a “success fee” capped at 25 per cent of general damages and past losses (future losses are excluded from the cap). CFAs were introduced by the Courts and Legal Services Act 1990, expanded by the Access to Justice Act 1999, and substantially reformed by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). The current LASPO framework caps success fees, prevents recovery of success fees from defendants, and creates specific rules around After-the-Event (ATE) insurance. Understanding how CFAs work is essential before signing one.
This guide explains in detail how UK CFAs work, the key terms, the success fee, the 25% cap, and how to evaluate a CFA before signing.
What Is a Conditional Fee Agreement?
Basic Structure
A CFA is a written agreement between solicitor and client:
- Solicitor handles case without upfront fees
- If case loses, solicitor receives no fees from client (typically)
- If case wins, solicitor receives base costs plus success fee
- Specific terms in written agreement
The “No Win No Fee” Promise
The popular term reflects the financial position:
- Client pays no solicitor’s fees if case lost (subject to conditions)
- But may have other costs (disbursements, defendant’s costs)
- ATE insurance typically arranged to cover these
- Specific obligations to cooperate with case still apply
Statutory Framework
- Courts and Legal Services Act 1990 (original framework)
- Conditional Fee Agreements Order 2013
- Specific requirements for valid CFA
- Solicitors must comply or CFA invalid
The Success Fee Explained
What Is a Success Fee?
The success fee is additional payment for risk:
- Solicitor takes financial risk by handling case without upfront payment
- Success fee compensates for cases that are lost
- Calculated as percentage of base costs typically
- Or percentage of damages
The 25% Cap
LASPO 2012 introduced specific protections:
- Success fee cannot exceed 25 per cent of general damages and past losses
- Calculated on general damages and past special damages
- Future damages excluded from cap calculation
- Specific protection for claimants
How the 25% Cap Works
Example calculation:
- General damages: £20,000
- Past special damages (lost earnings, treatment): £10,000
- Future damages: £15,000
- Cap base: £30,000 (general + past special)
- Maximum success fee deduction: £7,500 (25% of £30,000)
- Net to claimant: £20,000 – £7,500 + £15,000 (future damages) = £27,500 (approximate, before other deductions)
Success Fee vs Base Costs
Important distinction:
- Base costs — the solicitor’s standard fees for the work done
- Recoverable from defendant in most successful cases
- Success fee — additional reward for taking the risk
- Not recoverable from defendant (post-LASPO)
- Deducted from client damages instead
Pre-LASPO vs Post-LASPO
The 2013 Reform
LASPO 2012 (effective April 2013) substantially changed CFAs:
- Pre-LASPO: success fees recoverable from losing defendant
- Post-LASPO: success fees deducted from client damages
- Pre-LASPO: ATE premiums recoverable from defendants
- Post-LASPO: ATE premiums deducted from client damages (with limited exceptions)
Why the Change?
Government concerns:
- Defendant costs rising substantially
- Insurance premiums increasing
- Perceived excess in some claims
- Reforms to control costs
Impact on Claimants
Current position:
- Reduced net compensation in most cases
- 25% cap provides specific protection
- Claims still viable but lower net amounts
- Specific calculations required
What the CFA Document Should Include
Required Terms
Valid CFA must include:
- Identification of the parties
- Description of the case
- Definition of “win” (and what triggers payment)
- Specific success fee percentage
- Specific cap mechanism (25% of general damages and past losses)
- Termination rights
- Costs and disbursements explanation
What “Win” Means
Critical to understand:
- Usually means recovery of damages (any amount)
- Or favourable outcome on liability
- Specific definition in your CFA
- Some CFAs include broader definitions
Client Obligations
CFAs typically require client to:
- Cooperate with case progress
- Provide accurate information
- Attend appointments
- Follow reasonable advice
- Disclose relevant information
Termination Rights
- Solicitor may terminate if client breaches obligations
- Client may terminate (sometimes with consequences)
- Specific termination procedures
- Effect on costs
After-the-Event (ATE) Insurance
What ATE Covers
ATE insurance protects against:
- Defendant’s costs if you lose
- Your own disbursements (court fees, expert reports) if you lose
- Specific terms vary by policy
When ATE Is Used
Typically arranged with CFA:
- Most personal injury cases (subject to specific protections)
- Premium typically paid from damages if case wins
- Premium typically waived/zero if case lost
- Specific policy structure varies
QOCS — Qualified One-Way Costs Shifting
Specific protection for PI claimants:
- Introduced 2013
- Claimant typically not liable for defendant costs if case lost
- Specific exceptions (fundamental dishonesty)
- Reduces need for ATE in most cases
When ATE Still Needed
- Disbursements (court fees, experts)
- Cases where QOCS may not apply
- Some specific case types
- Specialist solicitors assess case-by-case
See our ATE insurance explained guide.
Disbursements — Often Misunderstood
What Are Disbursements?
Costs beyond solicitor fees:
- Medical expert reports
- Court fees
- Counsel fees
- Specialist investigation costs
- Medical records charges
Disbursement Treatment
Typically:
- Solicitor advances disbursements during case
- If case wins, defendant pays disbursements (mostly)
- If case lost, ATE typically covers disbursements
- Some disbursements may be deducted from damages
Disbursement Disclosure
CFAs should explain:
- How disbursements are funded
- Client responsibility
- Insurance coverage
- Final settlement deductions
Calculating Your Net Damages
Typical Deductions
From your gross damages:
- Success fee (subject to 25% cap)
- ATE premium (sometimes)
- Some disbursements (in some cases)
- CRU deductions (benefits paid)
- Net amount to claimant
Example Calculation
Typical scenario:
- Gross damages: £25,000
- CRU benefits recovered: £2,000
- Success fee (capped at 25% of cap base): £4,000
- ATE premium: £500
- Net to claimant: £18,500
Specific amounts depend on individual case factors. Specialist solicitors should explain expected deductions clearly.
CRU — Compensation Recovery Unit
Specific deduction:
- Government recovers benefits paid because of accident
- Deducted from settlement before client receives
- Specific calculation method
- Sometimes substantial
Solicitor vs Claims Management Company
Different Providers
Different routes:
- Solicitor — fully regulated by Solicitors Regulation Authority
- Claims Management Company — regulated by FCA
- Different oversight regimes
- Different fee structures sometimes
CMC Approach
CMCs typically:
- Refer cases to panel solicitors
- Take referral fees
- May handle some claims directly
- Less direct legal expertise typically
See our solicitor vs CMC guide.
Evaluating a CFA Before Signing
Key Questions to Ask
- What is the success fee percentage?
- What is the 25% cap calculation?
- What are the expected total deductions?
- What does “win” mean specifically?
- What ATE arrangement is proposed?
- What disbursements am I responsible for?
- What are termination rights?
Reading the Document
Critical points:
- Take time to read fully
- Ask questions about anything unclear
- Get specific examples of likely deductions
- Confirm 25% cap is properly applied
Cooling Off
Most CFAs include:
- Statutory cooling off period
- Right to terminate within specific time
- Without significant cost typically
CFA Alternatives
Damages-Based Agreements (DBAs)
Alternative funding:
- Solicitor takes percentage of damages directly
- Different mechanics than CFA
- Less common in personal injury
- Specific regulatory framework
Legal Expenses Insurance
If you have:
- Home insurance often includes legal cover
- Motor insurance often includes legal cover
- Specific coverage limits
- May fund legal costs directly
Trade Union Funding
For workplace injuries:
- Trade union members often have legal cover
- Funded by union
- Specific solicitors panel
- No success fee deduction typically
Self-Funding
- Standard private retainer
- Hourly rates or fixed fees
- Substantial upfront commitment
- Some prefer for certainty
Common Questions About Conditional Fee Agreements
Will I really pay nothing if I lose?
Mostly yes, with specific conditions. CFAs ensure: no solicitor’s fees if case lost, ATE typically covers defendant’s costs and disbursements, QOCS provides further protection (since 2013) against defendant costs in PI cases. Some specific situations create risks: fundamental dishonesty, failure to follow legal advice, withdrawal without good reason. Specialist solicitors explain specific risks clearly. For most claimants, the “no win no fee” promise reflects practical reality.
How much will the success fee cost me?
Capped at 25% of certain damages only. The cap applies to:
- General damages (pain and suffering)
- Past special damages (lost earnings, treatment already incurred)
- But NOT future damages (future care, future loss of earnings)
For a £25,000 settlement with no future damages, maximum success fee deduction is £6,250. For substantial cases with significant future damages, the cap impact may be smaller as a percentage of total settlement. Specialist solicitors should provide specific estimates.
What happens if I want to change solicitors during my case?
You retain the right to change solicitors. However: original solicitor may have right to be paid for work done (depending on CFA terms), original solicitor may have lien over case papers, terminating the CFA may trigger specific consequences. Standard advice: discuss concerns with original solicitor first, get written details of any termination consequences, consider specialist legal advice before changing. Most reputable firms handle change requests professionally.
Do all solicitors offer CFAs for personal injury?
Most personal injury specialists do. UK personal injury practice is dominated by CFA funding. Most established PI firms offer CFAs for most cases. Some cases may not be CFA-suitable: weak liability cases, cases below specific value thresholds, cases with specific complications. Specialist solicitors assess case suitability at initial consultation. Free initial consultation is standard.
Can the success fee be more than 25% of my damages?
No, in personal injury cases. LASPO 2012 specifically caps success fees in personal injury at 25 per cent of relevant damages. This protection is statutory — cannot be contracted out. If your CFA appears to suggest higher percentages, this is either misunderstanding or improper drafting. Specialist legal advice clarifies. The 25 per cent cap is one of the most important consumer protections in UK personal injury funding.
I have legal expenses insurance from my home/car policy. Should I use that instead of a CFA?
Often yes. Legal expenses insurance may provide:
- Direct funding without success fee deduction
- No deductions from your damages
- Substantial net advantage
Solicitors should advise about LEI before recommending CFA. Some specialist firms work directly with LEI providers. Always check your home and motor policies for legal cover before engaging a CFA.
Related Guides
No Win No Fee Personal Injury Solicitors UK
After-the-Event (ATE) Insurance Explained
What Fee Do Personal Injury Solicitors Take?
Solicitor vs Claims Management Company
Personal Injury Claim Time Limits UK
How Long Does a PI Claim Take?
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