CFA risk assessment

Writing in the Association of Law Costs Draftsman’s Journal for February, Simon Murray expressed surprise to discover firstly that the CPR did not define what a risk assessment should contain in order to be valid or, second, require that the solicitor for the receiving party should ensure that a CFA detailed their rationale for assessing the risk of a particular matter. Regulation 3(1)(a) of the Conditional Fee Agreements (CFA) Regulations 2000 (SI 2000 No 692) merely states that a CFA ‘must briefly specify the reasons for setting the percentage increase at the levels stated in the agreement …’ It would therefore seem that a simple statement that ‘this matter had a limited chance of success’ would suffice. CPR rule 44.15(1) and s32.7 of the Costs Practice Direction take matters no further. Mr Murray also looked in vain for effective sanctions where the solicitor for the receiving party failed to serve the statement of reasons on the paying party as required by CPR rule 44.3B(1). Although the rule contains a provision that an additional liability shall not be recoverable where the statement of reasons has not been served, s1O.1 of the Practice Direction provides relief from sanction provided that the statement is served as quickly as possible after the solicitor becomes aware of the default, and, even if he fails to do this, CPR rule 3.9(1) comes to his rescue in some courts who consider raising the failure to serve the statement of reasons as a technical challenge which is saved by the provisions of rule 3.9(1). Mr Murray concluded that the combined effect of the provisions is that a paying party may be none the wiser as to how a success fee has been calculated even after the court has determined its amount.