Govt rids CFA cases of indemnity principle

The Government has thrown its weight behind the use of conditional fee agreements (CFAs) by removing a long-running legal complication that has made them confusing for clients.

Last Monday (2 June), new regulations came into force scrapping the use of the indemnity principle in no win, no fee cases.

The indemnity principle, which requires lawyer and client to agree a set hourly rate at the start of a case, conflicts with CFAs because CFA clients do not agree to pay anything.

The indemnity requirement led to a farcical situation where CFA clients had to ‘pretend’ to agree an hourly rate with their solicitor, even though the CFA meant they would never pay anything towards their case.

The new regulations follow more than a year of lobbying from personal injury lawyers, most of whom conduct all of their business using CFAs.

Martin Cockx, partner at personal injury firm Amelans, welcomed the new regulations. “This has made CFAs much more user-friendly. It’s hard to convince a client they don’t have to pay you when they also have to sign an agreement stating an hourly rate,” he said.