CFA guidelines

The following guidelines seek to ensure compliance with the regulations covering CFAs and to address the main risks inherent with CFA work. Lawyers who intend to pursue a case under a CFA should:

1. Review the CFA Suitability checklist, which sets out a number of factors to help you decide if a case is suitable for a CFA.
2. Ensure you pick one of the CFA options in the €˜basis of charging' box in the New Matter Form or, if you move a matter over to a CFA midway, then you should email the Clients Team to let them know the matter has become a CFA.
3. Address the matter of funding fully with the client and keep a file note. The Alternative Funding Sheet can help you do this. This is part of all Litigation Engagement Letters. While the firm does not accept Legal Aid instructions, it is mentioned for completeness. Litigation Funding is also becoming increasingly common and there are Approved Suppliers in this respect in Keyed-In. You might find their trade body's website useful too. You will need to agree fees, success fees, what is paid if the client loses (nil fees or reduced fees) and the date of the CFA's effect - retrospective effect is permitted.
4. Make use of the Keystone templates:

1. CFA Template A - No win, no fee Conditional Fee Agreement with success fee.
2. CFA Template B - Partial risk Conditional Fee Agreement with success fee.
3. CFA Template C - Partial risk Conditional Fee Agreement with no success fee.
4. CFA Template D - Partial risk Conditional Fee Agreement with success fee and cap.
5. CFA Risk Assessment Checklist.
6. CFA Risk Assessment Table.
7. CFA Success Fee Calculator.

1. All the template CFAs include drafting notes. You must complete the sections in yellow. Do not make any further amendments to the CFAs. If the template CFA does not fit your purpose, then we will need to engage counsel to prepare something bespoke. Contact the General Counsel for this and further guidance providing the General Counsel with your completed Template Agreement with tracked changes of the amends you propose to the standard template.
2. If a normal fee-paying Litigation Engagement Letter becomes a CFA, then a new Litigation (CFA) Engagement Letter must be issued. This Engagement Letter should expressly supersede the earlier Engagement Letter. Regulations relating to CFAs make the signing of a Litigation (CFA) Engagement Letter essential as acceptance cannot be assumed by the client's conduct. As this is a new contract, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 may apply. Where the client is an individual dealing as a consumer and contracting at a distance, then the requisite notice must be sent to the client for signature. The requisite notice is automatically included at the foot of the CFA templates for you to include when appropriate.
3. Make use of the CFA Risk Assessment Checklist. Success Fees must be proportionate to risk, and there is a direct mathematical formula to follow once the prospects have been assessed. The Risk Assessment Checklist is your internal note, but the Risk Assessment Table is an important part of the CFA as it records the mechanics of the success fee and that the client accepts the same. While it can be omitted, this is not advisable.
4. CFAs usually go hand in hand with ATE insurance. Arranging insurance is a regulated activity. As it happens, we are allowed to do this on account of our registration with the FCA, but we must only do so in compliance with the very strict rules in this area. Please consider the guidance under €˜Arranging insurance for clients' before taking any further steps to arrange insurance. The client will need advice on the suitability of the proposed policy. For this reason, you are advised to always refer the client to an insurance broker (there are recommendations in our Approved Suppliers). You should not arrange insurance for the client directly with insurers. If you want to help the client find the best policy, then you should first contact our colleague Marie-Claire Di Mambro who can help you with the €˜demands and needs' letter which will need to be sent to the client as required by the SRA Financial Services (Conduct of Business) Rules. Marie-Claire will charge her time to the file.
5. Always ensure that you issue the accompanying Litigation (CFA) Engagement Letter and attendant documents.
6. NOTE: If you wish to use Template A (full/ no win, no fee), please amend the relevant paragraphs of the template Litigation (CFA) Engagement Letter, to reflect the fact that it is a no win, no fee agreement. We suggest replacing the paragraphs which refer to the client's responsibility to pay our costs in "full" in the event of "losing" the case to include the following

. "If you lose (whether wholly or partly), then you will need to pay any award or settlement to the other side, our disbursements and any costs of the other side awarded against you. The other side's costs may be substantially higher than your own."

"In the CFA you have agreed to pay our disbursements regardless of the outcome of the case. It is our usual policy to ask for funds in advance to cover this. This is particularly important when dealing with a dispute, where there are often substantial disbursements, such as fees for a mediator, expert or barrister."

1. Advise the client that costs incurred in setting up the CFA and ATE insurance (including the costs incurred keeping the ATE Insurer updated during the life of the claim) and any success fee, are payable by the client and are not recoverable from the opponent even upon success (subject of course to the limited exceptions carved out by legislation).
2. Ensure that Invoices issued to the client pursuant to a CFA are marked "Interim Invoices" to ensure that the success fee may be subsequently charged. This can be done by advising the Invoicing Team through the Additional Information box in the invoicing section of Keyed-In. For clarity, these are also described in the invoicing section of Keyed-In as €˜Reviewable/ CFA' Invoices.
3. Send a signed copy of the CFA to the Clients Team.
4. Address barristers' fees; in particular, will counsel be instructed on a CFA? If you engage counsel on a CFA, then you should involve a costs draftsman to advise the Firm on the terms of counsel's CFA, subject to ensuring the firm is not liable in the event of a client default.

Hint: CFAs can be assigned. There is a template CFA assignment and guidance on assigning a CFA in Keyed-In.