No win no fee in Adjudication
Can I have a “no win no fee” arrangement in Adjudication?
A “No win No Fee” arrangement, otherwise known as a Conditional Fee Arrangement (“CFA”), is one that could suit many clients’ needs. At First 4 Adjudication we can make an assessment of your case and, if appropriate, enter into such an agreement. While each case will be different, First 4 Adjudication will develop a risk/benefit outcome and will indicate whether such a plan will suit the merits of the case.
A CFA is an agreement under which the solicitor receives no payment, or less than normal payment, if the case is lost, but will receive normal, or higher than normal payment if the Client is successful.
In certain circumstances this can be of real benefit to the Client who will consider his potential outlay and understand that if the case is lost then the legal costs can be capped.
However Clients should be aware that they could still be liable for the Adjudicators costs if the award goes against them and these can be significant.
The allocation of costs in Adjudication has evolved since the inception of the Act. Prior to 1st October 2011, the parties were in a position to incorporate terms with regards to the allocation and payment of costs and fees arising out of adjudication. Post 1st October 2011, the adjudicator must have jurisdiction to order a party to pay costs. The adjudicator is also entitled to decide how he allocates his costs between the parties.
Historically parties to a contract have tried to discourage Adjudication by stating that the costs would have to be paid by the Referring Party, including paying fees of all parties and amounts owing to the Adjudicator. Such terms, even if incorporated into a contract have been held to be ineffective and unenforceable. Yuanda v WW Gear Construction Ltd (2010).
While adjudication should be a cheaper option than litigation, parties still need to bear the costs of the adjudicator’s fees and expenses as well as their own costs in the preparation for the adjudication. So while a CFA may be a useful tool in some cases you should always keep in mind the potential costs that you may still have to cover.