Conditional Fees and the Contingency Fees distinction: A comparative study of the UK and US risk assessment for insurers in litigation

Abstract

The Conditional Fee Agreements in the UK and the Contingency Fee in the US for legal retainers can be distinguished by their risk lawyers take even if they both allow law firms to be stakeholders in the litigation process. The introduction of the conditional fee agreements (CFI) in England enabled a framework of civil litigation that could be relied upon where the cause of action could not be financed by the client. There was an element of risk involved which the insurance company had to calculate and the Jackson Reforms were responsible for effective management of litigation through the introduction of costs budgeting. While the after effects insurance was abolished the various forms of CFI could facilitate the insured litigant. This has been harmonised by a consumer based legal provision in the UK that is the priority of the Legal Services Act 2007. The comparison needs to drawn with the contingency fee agreement offered by US firms that have encouraged litigation and allow the losing party to forfeit costs when losing their case. The argument of this paper is to retain both these form of agreements in their respective jurisdictions but to retain the flexibility of allowing out of court settlements.