The Collective Conditional Fee Agreements Regulations 2000 came into force on 30 November 2000.
This article covers the main points in the regulations, which can be obtained from the Lord Chancellor's Web site and HMSO.The new regulations allow bulk purchasers of legal services to enter into collective arrangements with solicitors where fees are payable on a conditional basis.
During the consultation process a distinction was drawn between a bulk purchaser, such as a commercial organisation, which purchases legal services on its own account and bulk purchasers such as trade unions, who purchase legal services on behalf of others.
Accordingly, the regulations distinguish between a 'client' and a 'funder'.A client is defined as 'a person who will receive advocacy or litigation services to which the agreement relates'.
A funder is defined as 'the party to a collective conditional fee agreement (CCFA) who, under that agreement, is liable to pay the legal representative's fees'.
Under reg 3(2)(a) 'an agreement may be a collective conditional fee agreement whether or not the funder is a client'.
Under reg 6(1) the CCFA must be signed by the funder and the legal representative.
Therefore, the regulations regulate the position between the funder of litigation and the provider of advocacy or litigation services.
They recognise that, where the client and the funder are not the same, the client does not need the same information on costs as they would if they were entering into an individual conditional fee agreement (CFA).Collective conditional fee agreementsAs solicitors will be aware, CFAs now include any agreement where fees and expenses or any part of them are payable only in specified circumstances.
The new regime of recoverability of success fees and legal expenses insurance premiums will also apply.
A CCFA 'does not refer to specific proceedings, but provides for fees to be payable on a common basis in relation to a class of proceedings, or, if it refers to more than one class of proceedings, on a common basis in relation to each class'.The Law Society is seeking confirmation from the Lord Chancellor's Department that multi-party actions are intended to fall within the provisions.
This might be useful where, for instance, a representative committee acts as the 'funder' supported by a costs sharing agreement entered into between all members of the multi-party action.The regulations only apply to agreements entered into on or after 30 November 2000.
Reg 7 amends the individual Conditional Fee Agreement Regulations 2000 by making it clear that those regulations do not apply to CCFAs.Under reg 4(1) the agreement 'must specify the circumstances in which the legal representative's fees and expenses, or any part of them are payable'.
Reg 4(2)(a) says the agreement must provide in respect of any 'specific proceedings' covered by the CCFA that the legal representative must 'inform the client as to the circumstances in which the client may be liable to pay the costs of the legal representative'.
The client must also be provided with any additional information relating to this that the client may reasonably require.
Although this applies where the funder is also the client, it is perhaps more important where this is not the case, as it provides protection to clients who might incur any residual liability, for instance if the funder is not providing a full indemnity.The provisions within the individual Conditional Fee Agreement Regulations that require specific information to be given to the client prior to signing a conditional fee agreement, for instance, in relation to appropriate methods of financing costs, are omitted.
It was considered during the consultation process that the Solicitors practice rule15 and the Solicitors Costs Information and Client Care Code 1999 were sufficient to cover any additional information that should be provided to the client in respect of any residual liability for own or opponent's fees and expenses.Success feesGenerally the regulations are less onerous than those relating to individual CFAs.
However, where instructions are given to act on any 'specific proceedings' covered by the CCFA, the agreement must provide for the solicitor to prepare a written statement covering an 'individual' risk assessment, his assessment of the amount of the percentage increase and his reasons for setting the percentage increase at that level bearing in mind risk assessment.It is not going to be possible for a bulk purchaser to agree one percentage increase across all of its cases.
On the question of recovery of insurance premiums and success fees the courts will assess reasonableness in relation to the specific proceedings.Reg 5 also contains a prohibition on recovering the balance of a success fee if it has been reduced by the court or upon agreement, unless the court is satisfied that it should continue to be payable.Practice rule 15 and costsLaw Society practice rule 15 requires the giving of information about costs and other matters in accordance with the code.
The code suggests that it is good practice to record in writing all the information required and the reasons why any information required has not been given.Section 2 of the code indicates that parts may not be appropriate in every case.
An example is given of a regular client for whom repetitive business is done and who has been provided with relevant information in the past.
The information needed by a bulk purchaser under a CCFA may be less than to a client who does not give repetitive business.Para 2(e) of the code states that it applies to contingency fee and conditional fee arrangements.
However, unless the client has a residual liability for costs where a CCFA is in place then it would usually not be appropriate to provide full costs information to the client.
As suggested in the code it would be good practice to explain to the client why information on costs is not necessary.
The solicitor should ensure that a full indemnity is being provided by the funder not only for the fees and expenses of the client's own legal representative but also in respect of the opponent's costs.
If a full indemnity is not being provided, then certain provisions of the code would need to be complied with, for instance, explaining the residual liability to the client and discussing whether the client's liability for another party's costs may be covered by insurance.The above does not affect the solicitor's responsibility in relation to other aspects of rule 15 and the code, for instance, in respect of complaints.
In addition solicitors must remember that they are acting for the client on their specific proceedings where the funder is a different entity.
Therefore, they should ensure that they comply with all other professional duties.
In particular they should confirm instructions with the client -- a matter specifically covered in addition by reg 4(4) of the Collective Conditional Fee Agreements Regulations -- keep clients fully informed about the progress of their cases, and ensure that no conflict exists between the client and the funder such as would prevent the solicitor from acting.