A law firm which offers more

Call us: 0113 246 0622

Contingency Fee Agreements

Comments

As of 6 April 2010 the use of damages-based agreements (commonly known as Contingency Fee Agreements) in employment tribunal claims will have a statutory footing. Until now such agreements have existed but without regulation.

As of 6 April 2010 the use of damages-based agreements (commonly known as Contingency Fee Agreements) in employment tribunal claims will have a statutory footing. Until now such agreements have existed but without regulation.

The Damages-Based Agreements Regulations 2010 will introduce the requirements with which an agreement between a client and a representative must comply in order to be an enforceable damages based agreement in an employment matter. The Regulations are the first made by the Lord Chancellor under the powers conferred on him by Section 58AA (4) of the Courts and Legal Services Act 1990.

As well as setting out the requirements of the agreement, the Regulations also set out information that must be given to the client before the agreement is signed and the form that the agreement must take. One key feature of the Regulations is to limit the fee that the representative may charge to 35%, including VAT, of the sum received by the client. The Regulations also specify certain requirements in the event that the agreement is terminated.

These regulations do not enable contingency fees to be charged in contentious matters for example personal injury claims or Employment Appeal Tribunals. Barristers are still prevented by their professional rules from charging a contingency fee on any type of work.

It would appear that the Regulations have fairly similar connotations as the now revoked Conditional Fee Agreement Regulations insofar as non-compliance with the rules will lead to an unenforceable agreement. Solicitors using such agreements will therefore need to keep a close eye on compliance in order to avoid being potentially tripped-up by Claimants seeking to avoid making such payments as a result of any non-compliance.

Jack Straw, the Lord Chancellor and Secretary of State for Justice, said:

"Unregulated contingency fee arrangements expose claimants to unfair terms and conditions being imposed by those representing them, which could lead to huge slices being taken out of their damages. These arrangements; unlike, for example, conditional fee agreements; have until now been without statutory regulation because of a longstanding legal anomaly. The measures announced by the government seek to redress this, offering proper regulation to protect the interests of consumers."

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.