Q&As

Can a discounted CFA be used where a client has legal expense insurance (LEI) so that the usual charge out rate applies if successful, but the LEI rate applies if not?

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Produced in partnership with Alex Bagnall of Total Legal Solutions
Published on LexisPSL on 16/05/2016

The following Practice Compliance Q&A Produced in partnership with Alex Bagnall of Total Legal Solutions provides comprehensive and up to date legal information covering:

  • Can a discounted CFA be used where a client has legal expense insurance (LEI) so that the usual charge out rate applies if successful, but the LEI rate applies if not?
  • What is a DCFA?
  • The role of success fees
  • Is there any limit to how the discount can be structured?
  • Advantages/disadvantages
  • What is BTE insurance?
  • The use of DCFAs in BTE-backed litigation

What is a DCFA?

Most lawyers will be familiar with a ‘pure’ CFA, often referred to as a ‘no win, no fee’ agreement. When acting under a pure CFA, a legal representative will be paid only if a win (as defined in the CFA) occurs. If it does not, no payment will be made for the work done. See subtopic: CFAs and DBAs for further information.

A DCFA may be referred to as a ‘no win, lower fee’ agreement. DCFAs include an agreement that the client will pay the legal representative’s fees in full if the case is successful, but, if it is not, the legal representative will be paid a reduced fee.

The role of success fees

Success fees are intended to ensure that a solicitor’s book of CFA-funded litigation can be run at a nil net loss. In other words, the success fee charged on the successful cases is supposed to cover the base costs which are not chargeable on the unsuccessful cases.

Success fees have a role to play in DCFAs for the same reason. However,

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