Consumers should be aware of possible lawyer fee deductions when involved in Conditional Fee Agreements (CFAs).
- The Legal Ombudsman stresses that no consumer should be surprised by deductions made from their damages for legal fees.
- New guidance from the Legal Ombudsman outlines the necessity for lawyers to explain their fee structures transparently.
- Consumers’ awareness of potential complaints starts when advised by a law firm, not just when viewing their bill.
- The Belsner case highlighted lawful deductions in CFAs, reinforcing the importance of transparency for clients.
Consumers engaged in Conditional Fee Agreements (CFAs) must understand potential deductions from their damages to cover legal fees. The Legal Ombudsman has issued guidance stating that these deductions should not come as a surprise. It is imperative for law firms to clearly communicate with clients about how these costs are calculated and deducted.
The newly released guidance advises that while fee deductions are not inherently unreasonable, they must be both justified and comprehensively explained to clients. For example, success fees, calculated based on risk, should have their reasoning transparently communicated. Failure to do so may result in clients lacking essential information about their incurred costs.
The Ombudsman’s guidelines highlight that the date a consumer becomes aware of a potential complaint against a success fee is vital. This date is typically when they are informed by a law firm that such a complaint is possible, suggesting that viewing their bill is not enough for full awareness.
A significant ruling emerged from the Belsner case, where it was ruled lawful for solicitors to make deductions from damages for costs recovery. This ruling underscores the importance of law firms maintaining transparent and fair practices when informing clients about potential charges.
Chief Ombudsman Paul McFadden acknowledged the frustration among some solicitors towards firms reclaiming legal fees on behalf of consumers, emphasizing the need for professionalism and constructive responses to requests and complaints. He reiterated that consumers have the right to request a bill, even if the original has been misplaced, though they may need to cover reproduction costs.
Transparently communicating fee structures is essential for client trust and compliance with legal standards.
