Cost discouraging SMEs from going to court but many don’t know about CFAs, survey finds

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By Legal Futures

19 December 2011

Doors to the court: knowing about CFAs makes litigation more palatable for companies

Worries about the cost of going to court are preventing small and medium-sized businesses (SMEs) from enforcing their legal rights, yet many remain unaware that commercial disputes can be funded through conditional fee agreements (CFAs), new research has shown.

In a YouGov survey, carried out on behalf of John Kennedy Limited, 52% of SME decision-makers cited cost as the single biggest factor that would prevent them from pursuing a legal dispute.

There was a huge gap between that and the next most cited answer, with 12% saying the hassle/effort of pursuing a dispute would most put them off, followed by the damage to business relationships (10%).

John Kennedy is a commission-free dispute consultancy that helps businesses start the legal proces

s and puts them in touch with large law firms willing to work under CFAs.

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Yet 40% of decision-makers were unaware that they could pursue a commercial business dispute using a CFA. Knowing they could made a third (33%) more likely to pursue a legal claim. However, 37% of respondents believed they would get a better service if they paid a solicitor by the hour.

Barrister Tina Morgan, the founder of John Kennedy Limited, said: “There are large, reputable law firms who will share the risk of taking legal action with businesses and allow them proper access to justice.” Over half of the survey’s respondents (53%) agreed that ‘no-win, no-fee’ allowed businesses access to justice.

Ms Morgan predicted that the reforms to CFAs contained in the Legal Aid, Sentencing and Punishment of Offenders Bill mean the number of solicitors willing to work on a CFA will “probably decrease”.

She continued: “But even then this will be a far more cost-effective means of pursuing a dispute than the traditional route of paying by the hour, win or lose – 75% of something is far better than 100% of nothing because you were afraid to make a claim in the first place.”

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