Conditional Fee Agreements and Damages-Based Agreements, What’s the Difference
A Conditional Fee Agreement and a Damages-Based Agreement can both be described as “no win, no fee”, but they calculate payment differently.
A Conditional Fee Agreement and a Damages-Based Agreement can both be described as “no win, no fee”, but they calculate payment differently.
That difference matters because two firms can use the same headline phrase while offering contracts with different financial consequences.
The safest way to compare them is to ignore the marketing label for a moment and ask how the representative’s payment is actually calculated.
How does a Conditional Fee Agreement work?
Under a CFA, the solicitor’s entitlement to some or all of their fee depends on the outcome defined in the agreement.
If the case succeeds, the solicitor can receive their base costs and may charge a success fee. In personal-injury cases, the success fee paid by the client is capped at 25% of specified damages, excluding damages for future care and loss.
The success fee is an uplift on the solicitor’s costs. It is not simply another name for owning 25% of the claim.
How is a DBA different?
Under a DBA, payment is calculated by reference to a percentage of the financial benefit recovered when the contractual success criteria are met.
The agreement should state the percentage and explain what is included within it.
Different legal areas are subject to different rules and caps, so do not take a percentage quoted for one type of case and assume it applies to another.
Why can the final figures still be confusing?
Because the headline percentage may not tell you everything.
You may need to understand VAT, disbursements, insurance premiums, costs recovered from the opponent and how any recovered costs interact with what you owe your own representative.
SRA guidance requires solicitors to provide clear, accurate information about charging arrangements and to explain the circumstances in which additional costs may arise.
A worked example is more useful than a slogan
Suppose somebody tells you their fee is “25%”.
Ask them to show, in pounds and pence, what happens if £20,000 is recovered.
What is the solicitor’s fee? Is VAT already included? Is an insurance premium additional? Are any disbursements deducted? What amount would actually reach your bank account?
Then ask the same question for an unsuccessful claim and for a claim you decide to end early.
Which is better?
There is no universal answer.
The suitability of a funding arrangement depends on the case, risk, likely work, other available funding and the terms being offered.
Before entering either arrangement, also check whether legal-expenses insurance, trade-union assistance, a statutory scheme or a free direct process could fund or resolve the issue differently.
Do not compare only the percentage
Price matters, but so do expertise, communication, case handling and contractual flexibility.
A lower headline percentage may not be better if other charges are added. A higher price is not automatically justified by a claim that a firm will obtain more compensation.
Compare the whole agreement and the service, not just the advert.
Last reviewed
5 September 2026
Important informationThis guide provides general information and is not intended to provide legal, financial, medical or other professional advice. Individual circumstances can be different. You may wish to check current information from official sources and seek advice from an appropriately qualified professional before making important decisions.