No Payment by Results at Common Law

Geraghty &Co v Awwad and Gustavon (CA 25 November 1999 Unreported)

This decision, by a differently constituted Court of Appeal (Lord Bingham, Schielman and May LJJ) turned Thai Trading on its head. It also introduced new nomenclature by referring to contingent ( Thai Trading) agreements as ‘conditional normal fee’ agreements (CNFA) and to agreements with a success fee as ‘conditional uplift fee’ agreements (CUFA). The court refused to follow the decision in Thai Trading, although acknowledging many benefits flowed from it, on the ground that there is no difference in principle between CNFAs and CUFAs: they are both based on payment by results, giving the lawyer a financial interest in the outcome of the litigation which is against the common law and public policy and therefore unlawful unless sanctioned by statute. The same objection applies to an agreement, as in Geraghty, to charge a reduced fee if the case is lost and a normal fee if it is won. Leave was given to appeal to the House of Lords.