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Success Fee Engagement Letter Template for England and Wales

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Key Requirements PROMPT example:

Success Fee Engagement Letter

"Need a Success Fee Engagement Letter for our law firm's representation of a tech startup in an upcoming merger, with a 2% success fee of the final transaction value and base hourly rates of £500, to be effective from January 2025."

Document background
The Success Fee Engagement Letter serves as a crucial document in modern legal practice, particularly in England and Wales, where success-based fee arrangements have become increasingly common. This document is typically used when clients seek to align legal costs with outcomes, making it particularly relevant for significant litigation, corporate transactions, or complex advisory work. The letter must carefully balance the requirements of the Courts and Legal Services Act 1990, the SRA Code of Conduct, and other relevant regulations while clearly defining success criteria, fee structures, and payment terms. It provides certainty and transparency for both the legal service provider and the client regarding the scope of work, success metrics, and associated fee arrangements.
Suggested Sections

1. Scope of Services: Clear description of legal services to be provided, including matter specifics and any limitations

2. Base Fee Structure: Standard hourly rates or fixed fees applicable to the engagement

3. Success Fee Calculation: Formula or percentage used for calculating the success fee, including any caps or limitations

4. Definition of Success: Clear criteria and metrics defining when success fee becomes payable

5. Payment Terms: Timing and method of payment for both base and success fees, including invoicing procedures

6. Client Obligations: Client's responsibilities, cooperation requirements, and information provision obligations

Optional Sections

1. Early Termination Provisions: Specific arrangements for early termination of the engagement and impact on success fees

2. Multiple Success Criteria: Different levels of success fees for different outcomes and how they will be determined

3. Third Party Funding: Arrangements with litigation funders and their impact on fee structures

4. Regulatory Compliance: Additional regulatory requirements based on client type (consumer vs. business)

Suggested Schedules

1. Fee Schedule: Detailed breakdown of base fees, hourly rates, and success fee calculations

2. Scope of Work: Detailed description of services covered under the engagement

3. Success Criteria Matrix: Detailed matrix of success criteria and corresponding fee levels

4. Team Structure: Key personnel, their roles, and respective hourly rates if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions















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Relevant Industries
Relevant Teams
Relevant Roles
Industries

Courts and Legal Services Act 1990: Primary legislation governing conditional fee agreements and success fee arrangements in England and Wales. Key focus on sections relating to conditional fee agreements.

Solicitors Act 1974: Fundamental legislation governing solicitor-client relationships and fee arrangements, including requirements for fair and reasonable charges.

Legal Services Act 2007: Framework legislation regulating legal service providers and their fee arrangements, ensuring consumer protection and professional standards.

Damages-Based Agreements Regulations 2013: Specific regulations governing damages-based agreements (DBAs), relevant if the success fee is structured as a percentage of damages recovered.

Conditional Fee Agreements Order 2013: Statutory instrument setting out rules for conditional fee agreements, including caps on success fees and requirements for agreement terms.

SRA Code of Conduct: Professional conduct rules including requirements for transparency in fee arrangements, client care obligations, and ethical considerations in success fee agreements.

Consumer Rights Act 2015: Consumer protection legislation ensuring fairness in contracts and transparency in service provision, particularly relevant for individual clients.

Consumer Contracts Regulations 2013: Regulations protecting consumers in service contracts, including requirements for information provision and cancellation rights.

Solicitors (Client Information and Professional Insurance) Rules: Specific rules governing the information that must be provided to clients and professional insurance requirements for solicitors.

Civil Procedure Rules: Court procedural rules that impact success fee arrangements, particularly relevant in litigation contexts and cost recovery.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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