UK: Alternative Fee Arrangements - Fixed, Capped And Conditional Fees

Last Updated: 11 February 2010
Article by Julian Johnstone

The cost of litigation is a problem. Even relatively simple County Court claims can cost over £15,000 if they conclude in a trial. Complex High Court claims can cost hundreds of thousands or millions of pounds.

Litigation costs so much because of the complexity of our legal system and modern commerce. In most cases, complicated commercial relationships generate very large amounts of written material. Lawyers need to understand these relationships and review the written material generated by them in order to advise their clients and prepare their cases for submission to Courts. These activities take significant amounts time to complete.

At the moment, lawyers charge their clients for litigation services on the basis of hourly rates, so the end cost of litigation is the sum of the total hours worked on the case multiplied by the hourly rates of the lawyers involved. Court timetables also take many months, sometimes years, to reach trial. Even ignoring Parkinson's Law (work expands to fill the time available for completion), the potential for legal proceedings to cost hundreds of thousands or millions of pounds is clear.

Furthermore, as it impossible to predict exactly how much time it will take to reach trial, lawyers are also loath to give anything more than an estimate as to what a case might eventually cost. For many clients, the uncertainty of the eventual cost of legal proceedings is often as significant a problem as the scale of the cost.

In the context of the current economic climate, and in the interests of giving access to justice to greater part of society, it seems that this model is becoming unsustainable for all but the very largest corporations.

However, by using alternative methods of funding, lawyers can provide access to a wider audience.

Capped and fixed fees

There is no real reason why lawyers cannot give contractually binding quotations for the costs of various stages of the litigation or even for the entire process. In most cases this may be expressed as an agreed cap on the fees that will be charged. The fees will still be based on the number of hours multiplied by the hourly rates of the lawyers involved, so the eventual fee may be less than the agreed cap, but never more.

This places some risk on the lawyer and, in return, they may wish to impose a minimum fixed fee. However, fee caps are very common in transactional legal work and in many transactional matters the lawyers do significant amounts of work which will not be charged to the client because the agreed cap has already been reached. The real reason why this type of arrangement is not used in litigation matters is because litigation is more uncertain in outcome and because large cases can generate very large fees.

However, where the cost of litigation is becoming unsustainable, my view is that fee-capping is going to become the norm for commercial litigation sooner rather than later. Good litigation lawyers should have nothing to fear because they will continue to attract business in the context of giving their clients realistic and carefully worked quotations for the cost of representation.

Conditional fee arrangements

Conditional fee arrangements (CFAs) or success fees are arrangements allowing lawyers to share their client's risk in litigation in return for a greater return in case of success. Under a CFA, a lawyer can agree with the client that the client will pay nothing or a discounted fee in the event the client's case fails. In return, the lawyer can charge his or her normal rates plus an uplift of up to 100% in the event that the client's case succeeds.

For the client, the attractiveness of the arrangement arises out of the probability that if the case succeeds, a very significant percentage of the lawyer's costs, including the uplift, will be payable by the other side. So, assuming the other side can pay, the client will only pay a portion of the lawyer's costs if it wins and nothing if it loses. Furthermore, the client can also protect itself from any liability to pay the other side's costs in the event that it loses the claim, with after the event insurance.

There is a catch, of course, which is having a case that the lawyer believes is sufficiently likely to succeed to make a CFA attractive.

Notwithstanding that, I believe CFAs are also going to feature more significantly in the commercial litigation market in the future (although much will depend on the eventual outcome of the Jackson report into litigation costs and funding). Again, this is not something for lawyers to shy away from. Good litigation lawyers should be prepared to back their judgment. More widespread use of CFAs should also reduce the number of cases that are inappropriately litigated, because lawyers and insurers will not be prepared to fund them.

Clients can encourage this change by being demanding and, if necessary, moving their business to more commercially minded law firms.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions