Advantage and Disadvantage of Conditional Fee Agreements

Topics: Insurance, Contingent fee, Law Pages: 5 (1869 words) Published: May 2, 2011
STUDENT: Abdulla Shafeeg Ali

3. Analyse the advantages and disadvantages of conditional fee arrangements for legal aid.

A conditional fee arrangement is basically a form of risk sharing whereby if the lawyer loses the case, the client does not have to pay. However, if the case is won, the lawyer can be recompensed through a success fee, which is worked out as a percentage of his cost. In the US, many cases have been funded this way but in English legal system conditional fee arrangement had been banned until the enactment of the Courts and Legal Service Act 1990. Under the Access to Justice Act 1999 conditional fees form an important part of the government strategy for funding civil cases. There are advantages and disadvantages of conditional fee arrangement, in this essay I would like to explain about this issues. As with many, if not all, aspects of law everyone has an opinion. It is these opinions that help make up the advantages and disadvantages, in this case, of conditional fee arrangement (or conditional fee agreement) The main advantage is cost to the state. Conditional fee agreements cost the state nothing – the costs are entirely borne by the solicitor or the losing party, depending on the outcome. By removing huge number of personal injury cases from state funding and promoting conditional fee agreements for them instead, the government claims it can devote more resources to those cases which still need state funding, such as tenants’ claims against landlords, and direct more money towards suppliers free legal advice, such as Citizen’s Advise Bureaux. Another advantage is wider access to justice. The government believes that conditional fee agreements will allow many people to bring or defend cases who would not have been eligible for state funding and who could not previously have afforded to bring cases at their own expenses. As long as they can afford to insure against losing, and can persuade a solicitor that the case is worth the risk, anyone will be able to bring or defend a case for damages. Performance incentives also another advantage, that supporters claim conditional fees encourage solicitors to perform better, since they have financial interest in winning cases funded this way. Conditional fee agreements are allowed for defamation actions, and cases brought before tribunals, two major gaps in the provision of state funding. So this wider coverage is another important advantage of conditional fee agreement. Public acceptance is another advantage of conditional fee agreement. The Law Society suggest that clients have readily accepted conditional fee agreements in those areas where they have been permitted in the past. Within two years of the agreements being introduce, almost 30,000 conditional fee agreements had been signed, and by 1999 around 25,000 were in operation. This shows public acceptance of conditional fee agreements. Fairness to opponents is another important advantage. There are restrictions on the costs state-funded clients can be made to pay to the other side, which can give them an unfair advantage, particularly un cases where both sides are ordinary individuals but only one has qualified for state funding. The requirement for insurance in conditional fee cases solves this problem. There are criticisms or disadvantages of conditional fee agreements. Most of those who have criticized the legislation on conditional fee agreements accept that they are a good addition to the state-funded system, but are concerned that they may not be adequate as a substitute. In particular, critics – including the Bar, the Law Society, the Legal Action Group and the Vice-Chancellor of the Supreme Court, Sir Richard Scott – have expressed strong concerns that certain types of case will lose out under new rules. They suggest that solicitors will only want to take on cases under conditional fee...
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