This article explains everything you need to know about “no-win-no-fee” agreements.
If you’ve been injured, a solicitor may be prepared to pursue your claim on a “no-win-no-fee” basis. This means that the solicitor (or their law firm) will take the risk that your claim fails. Ordinarily, though, the solicitor will want a “success fee” to compensate them for taking the risk of failure.
Conditional Fee Agreements
If you decide to instruct a solicitor on a “no-win-no-fee” basis, you will actually enter what’s known as a Conditional Fee Agreement (or “CFA”), which sets out the details of the arrangement.
A CFA is a formal, legally binding agreement between you and your solicitor, and it must be in writing.
There are some restrictions on the terms of a CFA, including limits on the amount a solicitor can charge you as a success fee.
- Note CFAs changed in April 2013 under the Legal Aid, Sentencing and Punishment of Offenders Act.
Since April 2013, your solicitor is permitted to set the success fee as a percentage of the damages you recover on your claim. Successful claimants may see up to 25% of the damages awarded to them set aside for the solicitor’s success fee.
Significantly, solicitors are not permitted to use CFAs in matrimonial, child custody or other family law cases, and are not allowed to use them in criminal cases.
What happens if my claim fails?
If your claim fails, then generally you will not have to pay your solicitor anything at all (unless you have agreed to pay court costs, expert’s fees and similar expenses that the solicitor advanced in connection with the case).
It is, however, important to remember that if your claim fails in court, you will almost certainly be liable to pay the other party’s costs. Ordinarily, your solicitor will assist you in taking out insurance against this risk, but you will probably have to pay the insurance company yourself.
What happens if I win?
If you win, you will pay your solicitor their normal fees, their disbursements (which are out-of-pocket costs, such as filing fees and expert’s fees that they have advanced in connection with your case) and the success fee.
Ordinarily, the court will order your opponent pay all of these fees (except the success fee) and reimburse you for any premium you paid to insure against the risk that you would lose your case. But this does not happen in every case, so you may have to pay your own costs.
Remember too that “winning” a case is not always as straightforward as it may seem. Sometimes, it is possible to win a case overall, but to lose important intermediate proceedings. In these circumstances, you may be liable to pay some of the costs your opponent has incurred in connection with the intermediate proceedings that you lost.
Another way that “winning” may be affected is if your opponent made a pre-judgment settlement offer (known as a “Part 36 Offer”), which you rejected. If you reject a Part 36 Offer and receive judgment for an amount less than that offered, you will be liable for some or all of the costs incurred by your opponent after he/she made the offer. The principle is that you have to pay for your opponent’s “wasted costs” in forcing further (and ultimately unnecessary) litigation.
If you reject a Part 36 Offer against your solicitor’s advice and receive judgment for an amount less than that offered, you will also have to pay all of your own solicitor’s fees, including the success fee.
What happens if my claim settles before going to court?
The vast majority of personal injury claims are settled before trial. But a settlement will not relieve you of your obligation to pay your solicitor their fees, disbursements and success fee. Generally, fees are discussed during negotiations leading up to the settlement. So, typically, the settlement will require your opponent to pay some or all of your costs, usually directly to your solicitor.
What if I want to change solicitors before my case is finished?
If you decide to end the CFA before your case is concluded, then your solicitor will require you to pay all of their fees and disbursements up to the date you ended the agreement. You will also continue to be liable to pay them the success fee if you win the case using a different solicitor.
In practice, if you want to change solicitors part way through your case, you will need to negotiate some resolution with your first solicitor.
If your solicitor decides to end the CFA, then the amount you are required to pay them depends on their reason for ending the CFA.
If the solicitor ends the CFA because they have concluded that you are unlikely to win, then you pay only their disbursements, but no fee.
If the solicitor ends the CFA because you have not cooperated with them, you have not met your responsibilities under the CFA, or because you have rejected a settlement offer that they recommended you accept, they can require you to pay all of their fees and disbursements up to the date the CFA ends, plus the success fee if you eventually win the case.
Other points to consider
As mentioned above, even if you are pursuing your claim under a ‘no-win-no-fee’ arrangement with your solicitor, you are nevertheless exposed to the risk that if you lose you will be liable to pay your opponent’s costs. Ordinarily, your solicitor can arrange for what is known as “after the fact” or “ATE” insurance to cover this risk. The insurer may even be prepared to lend you money to pay the premium, but you need to bear in mind that if you lose you will be liable to pay the premium or repay the loan.
When your case goes to court (even at the initial stages of court proceedings) your solicitor will need to instruct a barrister to handle the court papers and appearances. Frequently, barristers who do personal injury work will also do so on a “no-win-no-fee” basis. Your solicitor should be able to assist you in putting together a “no-win-no-fee” package that includes their fees, the barrister’s fees, and the success fee for each of them.
If you’re working with a solicitor, they should be able to provide you with a complete explanation of how a “no-win-no-fee” arrangement will work. And the Law Society has produced a client’s guide to success fees, which your solicitor should be able to give you.
You can find “no-win-no-fee” solicitors in your area by searching our solicitor directory – just use the form on the right-hand side of this page.
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