CFA success Fees and After the Event Insurance premiums cease to be recoverable
save in libel/privacy, insolvency and mesothelioma cases, Conditional Fee Agreement (CFA) success fees and After The Event (ATE) insurance premiums have ceased to be recoverable from the losing party in civil litigation. The change will not affect CFAs and ATE insurance policies enetered into prior to 1 April 2013.
CFAs allow solicitors and their clients to share the risk of the litigation. The solicitor only charges the client if the objective set out in the CFA is achieved. Thess costs are then sought from the opponent. solicitors had been able to charge a success fee (a percentage uplift) in the event of success in recognition of the risk of not getting paid anything and the delay in payment. Previously this had also been recoverable from an unsuccessful opponent (subject to any challenge to the size of the percentage uplift). solicitors will still be entitled to charge success fees, but these will need to be borne by their clients.
ATE insurance allows litigants to insure against the risk of an adverse costs order. Again, the premium had been recoverable from an unsuccessful opponent (subject to any challenge as to its reasonableness). Litigants will now have to bear this cost themselves. ATE premiums are often 25-50% of the sum insured.
A form of contingency agreement known as 'Damaged Base Agreement' ('DBA') is now permissible whereby solicitors can charge only if the case is successful and take their fees from a proportion of damages awarded to a successful party.
Articles are intended as an introduction to the topic and do not constitute legal advice.