How is the success fee in a CFA calculated?

• A. Based on risk assessment.
• B. Based on damages.
• C. Based on court's risk rating.
• D. Based on client income.

Answer: (A)

In a conditional fee arrangement, the purpose of the success fee is to compensate the solicitor for taking on the risk that the case might not be won. The amount of this uplift is determined by assessing the level of risk involved in pursuing the claim. Factors commonly considered include how likely success is, how complex the issues are, how long the case will take, the amount at stake, and any uncertainties or potential adverse costs. The uplift is usually a percentage of the base costs and is agreed in advance as part of the CFA, sometimes subject to reasonableness checks or court rules.

This approach makes the uplift depend on the inherent risk of the case rather than on external factors like the damages the client might recover, a formal court risk rating, or the client’s income. So the best answer is that the success fee is based on risk assessment.