In November 2018, the Government announced that from 6 April 2019 conditional fee agreement (‘CFA’) success fees would no longer be recoverable from opponents in defamation and privacy claims.

A statutory instrument (2018 No.1287) gave effect to that announcement.  This means that success fees (but not ATE premiums) will cease to be recoverable for all CFAs entered into after 5 April 2019 in publication and privacy proceedings. There was a post about this announcement at the time.

Practitioners should be aware of a number of points in relation to CFAs entered into before 6 April 2019 under the terms of which a recoverable success fee is being sought:

  1. The CFAs of both solicitors and counsel must be entered into before 6 April 2019.  What is important is the date of the CFA, not the date of the issue of proceedings.  As long as the CFA is in place claimants are not required to issue proceedings until they are ready to do so (always keeping an eye on the applicable limitation periods).
  2. The CFAs should specifically include interim and final appeals, as well as the costs of assessment.  Success fees in relation to these types of proceedings will not be claimable unless they are specifically included.
  3. The CFA must include a risk assessment justifying the success fee (a discrete risk assessment, setting out the discrete risks of the particular claim – not a template generic one).
  4. As soon as the CFA is entered into, the opponent(s) must be notified of:
      • The existence of the CFA
      • The date of the CFA
      • The fact that it provides for a recoverable success fee
      • The fact that it covers interim and final appeals
      • The staging of the success fee (if applicable) but not the actual percentages (which are privileged)
      • The fact that counsel is similarly instructed pursuant to a CFA that provides for a recoverable success fee

    This must be done “as soon as possible” after the CFA is entered into even if that means such notification takes place prior to the letter of claim (see Springer v University Hospitals of Leicester NHS Trust [2018] EWCA Civ 436).

  5. It would be a good idea to remind the opponent(s) of the information set out at (4) above in the Letter of Claim (if this is served later than “as soon as possible” after the CFA is entered into).
  6. Further, formal notice of funding (i.e. using form N251) MUST still be FILED and SERVED on every other party with the claim form.
  7. Again, it would be a good idea to remind the opponent(s) of the fact that an appeal is covered by the CFA, along with the other information set out at (4) above, in the run up to any appeal covered by the CFA.
    There are a number of points to note in the CFA itself:
    (a)  The Law Society Conditions should no longer be attached as these are hopelessly out of date.
    (b)  The definition of “Win” is important and a question of balance.  The higher the “Win” hurdle, the more risk, so higher success fee more easily justified.  Or, to put it another way, the more risk the solicitors/counsel take on of not being paid, the greater the success fee likely to be recovered if they do “Win”.
    (c)  A CFA Lite increases the risk of solicitors/counsel not getting paid.  If standard practice is not to ask a client for any shortfall in recovery of costs, this should be formalised in the CFA so that credit is given for the CFA Lite arrangement and a higher success fee justifiable.

In short, practitioners should, over the next week, take steps to ensure that their CFAs are properly drafted, signed and notice has been given to the opponent.  Standard drafts should, however, be carefully examined: CFAs with recoverable success fees are something of a minefield and frequently contain flaws.  If in doubt, seek specialist advice on their terms.

Emma Foubister is a barrister at Matrix Chambers whose practice includes media and information law.

This post originally appeared on the Matrix Chambers Media website and is reproduced with permission and thanks