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What is a Discounted Conditional Fee Agreement?

What is a Discounted Conditional Fee Agreement?

discounted conditional fee agreement

Discounted Conditional Fee Agreements (DCFAs) represent a more refined approach to legal fee structures, designed to provide clients with flexibility and cost-effectiveness in pursuing legal remedies while mitigating financial risks.

In the complex landscape of legal services, where expenses can often deter individuals or businesses from seeking justice, discounted conditional fee agreements offer a practical solution by blending traditional Conditional Fee Agreements (CFAs) with discounted rates.

This agreement allows clients to engage legal representation without bearing the full burden of upfront legal costs. These agreements rely on the fundamental principle that legal fees are contingent upon successful outcomes, aligning the interests of clients and solicitors.

At Annecto Legal, we provide guidance to solicitors across all aspects of law firm litigation funding arrangements and insurance options for commercial dispute resolution. 

We also connect clients with the right solicitors who provide discounted conditional fee agreements. Additionally, we can assist in securing legal expenses insurance for your case. Our services are tailored to ensure that businesses or individuals who have suffered financial losses have the best possible chance of seeking compensation.

Discounted Conditional Fee Agreement: What is a Discounted Conditional Fee Agreement?

A discounted conditional fee agreement is a type of legal fee arrangement whereby the client and their solicitor agree on a discounted fee to be paid for legal services, contingent upon the success of the case.

In a traditional conditional fee agreement (CFA), also known as a “no win, no fee” arrangement, the solicitor agrees to take on the case without charging any fees upfront. Instead, the solicitor’s fees are contingent upon the successful outcome of the case, often including a success fee payable by the client if the case is won.

In contrast, a discounted conditional fee agreement functions on a similar principle but introduces a discounted fee component. This means that the client agrees to pay the solicitor a reduced fee compared to their standard rates if the case is lost, and legal fees are payable in full in the event of success only: a “no win, low fee”, if you like.

The hourly rate discount can vary depending on the complexity of the case, the potential risks involved, and other factors negotiated between the client and the solicitor.

The terms of a discounted conditional fee agreement, including the discounted rate and any fee included in the event of success, are negotiated between the client and the solicitor before the commencement of legal proceedings.

When are Discounted Conditional Fee Agreements used?

Discounted conditional fee agreements are used in various legal contexts where clients seek representation but may face financial constraints or risk aversion. Outlined below are some situations where these types of agreements are commonly used:

Commercial Litigation: Businesses facing disputes or litigation may opt for discounted conditional fee agreements to manage legal expenses while pursuing favourable outcomes. This can include contractual disputes, breach of agreements, intellectual property disputes, and other business-related matters.

Debt Recovery: Individuals or businesses seeking to recover outstanding debts may engage solicitors on a discounted conditional fee agreement basis to pursue legal action against debtors. This allows creditors to mitigate the risk of non-recovery while pursuing owed amounts through legal channels.

Consumer Rights: Consumers facing disputes with businesses over product defects, unfair practices, or breaches of consumer rights may utilise DCFAs to assert their legal rights without incurring significant upfront costs.

The benefits for solicitors and their clients

Discounted conditional fee agreements allow solicitors to attract clients who may be hesitant to pursue legal action due to financial constraints. Offering discounted fees and contingent payment structures allows solicitors to expand their client base and increase their caseload.

Despite offering discounted fees, discounted conditional fee agreements still provide solicitors with a financial incentive to achieve successful outcomes.

In addition to the discounted base fee, solicitors may also negotiate a success fee payable upon winning the case, further incentivising them to secure positive results for their clients.

These types of agreements typically involve clear and transparent fee structures, outlining the discounted base fee and any potential success fees payable upon winning the case. This transparency helps clients to understand the financial implications of pursuing legal action.

Choosing the right solicitor

When considering Discounted Conditional Fee Agreements, it is also important to note that having the right solicitor is vital for your case.

When making a claim, it is not essential to instruct the most expensive solicitor; however, your typical high street solicitor may not be the best choice either.

You should always choose a solicitor with the right specialism for your case to ensure the best outcome. It is also important to consider how your solicitor will be perceived by an opponent.

In addition to this, you may wish to think about your solicitor’s willingness to share the risk and their experience in working with legal funders and insurers.

ATE insurance and third party funding

Alongside discounted conditional fee agreements, there are alternative funding arrangements  and insurance policies available to assist when conducting litigation in a cost-effective manner. These methods include:

ATE insurance

After the event legal expenses insurance is often used in conjunction with a discounted conditional fee agreement. It can perhaps best be thought of as similar to a ‘swap’. For either no upfront fee or a small upfront fee, the insurer takes on all of the risk of the potential adverse cost award.

Therefore, the client has swapped their obligation to pay the defendants in the event of a loss with the obligation to pay the insurer in the event of a win.

This is generally an attractive swap as the client is likely to be in a better financial position following a win than following a loss. Also, the payment to the insurer will only be a percentage of the adverse costs rather than the whole amount.

Third party funding

Third party funding may be used as an alternative to a discounted conditional fee agreement. In some cases, third party litigation funders may be willing to provide funding for a case in exchange for a percentage of any financial settlement or damages awarded. Third party funding can be attractive for individuals who cannot afford to pay for legal fees themselves but have a strong case.

How can Annecto Legal assist?

At Annecto Legal, our professional advisors assist solicitors in finding the best funding models for their cases.

We also help clients in finding the right legal representation for their cases. With the right team, it is possible to put in place the appropriate litigation funding and insurance to take the case all the way to court, if necessary.

Of course, the preference is always to find a suitable settlement in a reasonable timeframe, but the best way to achieve this is to negotiate from a position of strength.

Having the best solicitors and being fully funded gives you that strength and forces your opponent to the negotiating table.

For more information regarding discounted conditional fee agreements, contact Annecto Legal now. We can help find you the right representation, as well as managing your financial risks and sourcing funding for your legal fees.

Unfortunately, because of the high costs of legal actions in the UK, we only assist in disputes in which the financial value of the claim is over £250,000, at the absolute minimum. We would like to be able to help on other claims, but we just don’t have access to any products that can assist on smaller matters.

Get in touch

* Annecto Legal can only assist on case where the loss is in excess of £100,000, with the exception of data breach claims. If you need assistance on a claim worth over £100,000, please get in touch using our form or the details below:

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Annecto Legal Ltd, 106 Kennedy Building, Murray Street, Manchester , M4 6HS


0800 612 6587


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