Consumer credit and client fee arrangements
Consumer credit and client fee arrangements

The following Practice Compliance practice note provides comprehensive and up to date legal information covering:

  • Consumer credit and client fee arrangements
  • Why is consumer credit an issue?
  • Enforceability
  • Criminal sanctions
  • Do you need a licence?
  • What is a consumer credit agreement?
  • Who is a consumer?
  • What is credit?
  • Are there any exemptions?
  • Decision tree
  • More...

Consumer credit and client fee arrangements

Law firms might be caught by the consumer credit regime:

  1. by entering into a consumer credit agreement as lender, eg in respect of their fees

  2. by engaging in ancillary consumer credit activities such as debt adjusting

Following the Court of Appeal judgment in CFL Finance Ltd v Laser Trust, a creditor that has entered into a settlement agreement attached as a schedule to a Tomlin Order could be caught by the consumer credit regime if the settlement agreement itself constitutes a consumer credit agreement—see further News Analysis: Does a Tomlin order provide ‘credit’ under the Consumer Credit Act 1974? (Gertner v CFL Finance). This could apply equally to a law firm’s settlement agreement, eg in settlement of a debt claim against a client, as to other claimants.

This Practice Note deals with your fee arrangements with clients. You may also wish to refer to Precedent: Fee arrangement and consumer credit—decision tree, Practice Note: Instalment payment of an outstanding bill and Q&A: Can I accept payment of an outstanding bill by instalments: before or after 1 April 2016?

For more guidance on ancillary consumer credit activities, see Practice Note: Law firms and ancillary consumer credit business. For an overview of the consumer credit regime as it applies to law firms, see Practice Note: Consumer credit and law firms: from 1 April 2016.

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