“No win, no fee” what’s the real cost?
Conditional Fee Agreements to pay your legal fees
Relevant across multiple law types
Conditional Fee Agreements are sometimes known as “no win,
no fee” agreements. The principle of
these is that the solicitor will not charge you legal fees if they lose the
case, but if they win, they will generally recover costs from the other side
plus a success fee and any unrecovered costs from you. They are usually used in connection with claims
for compensation, so the success fee comes out of any compensation award you
receive. There are some quite complex
rules governing how the success fee is calculated and how much it can be.
One of the main points to appreciate about conditional fee agreements is that the solicitor is sharing the risk of losing with you, to the extent that if you don’t win they won’t get paid. For this reason, solicitors do not have to offer conditional fee agreements or may not offer them in specific cases.
If your solicitor is prepared to offer a conditional fee agreement that means that they think you are likely to win. But that is no guarantee. The solicitor is just doing their best, usually using their knowledge of other similar cases, to estimate whether you are likely to win or not. Sometimes they get that judgement wrong, or things change as the case develops. It is also worth checking that the solicitor has good experience of your type of case as that makes it more likely that their judgement about the strength of it is correct.
Solicitors may set different success fees, in other words how much they will take out of your compensation, depending on how they feel about the strength of you case. So, a solicitor may charge a higher success fee for a case where they thought there were more risks than one they thought was straightforward to win. These risk assessments are usually done at the early stages of a case when not all of the evidence may be available. Sometimes solicitors may provide for varying the success fee if things change throughout the lifetime of a case or if it reaches certain stages. So, it’s important to understand whether that may happen.
In a typical case, as well as the solicitor’s own costs which may be covered by a conditional fee agreement, there will also be other expenses such as court fees or experts reports fees. Solicitors refer to these as disbursements. You need to understand who will pay for those in the event that you lost the case or whether you have any liability to pay them as the case goes along.
You also need to be clear how much you will pay in the event that you win and whether there are any circumstances in which you would have to pay if you lost. There may also be other situations, apart from a win or loss, where you have a liability to pay. So, for example you may end up having to pay if you did not accept a reasonable settlement offer.
Some lawyers offer discounted conditional fee agreements which mean that if you lose you will still have pay them something for their fees, but it may be less than they would normally charge. Again, you need to be clear about what you will be charged in what circumstances.
You also need to consider whether there may be a claim by your opponent for costs if you lost. You can have a no win no fee agreement where your own solicitor will not charge you, but your opponent could, if you lose your case. In most personal injury/accident cases, that risk is not high because a court would not generally make a cost order against you in those circumstances, but in other types of cases that risk is much higher. Sometimes it is possible to obtain an insurance policy which could cover that risk.
You should discuss the cost risks with your solicitor so that you know what will happen in the event of you winning or losing. Solicitors have a duty to explain to you how funding arrangements that they offer you work so if you are not clear about it you should ask.
Finally, barristers may also offer conditional fee agreements. Usually, barristers are working through solicitors and not with clients directly. So the barrister would have the no win no fee agreement with the solicitor, but you would still end up paying the barristers success fee out of your compensation. If the barrister does not have a conditional fee agreement with the solicitor, then you could end up paying the barrister’s fees yourself if you lost. Accordingly, if your solicitor is proposing to use a barrister it’s important that you understand what will happen with the barrister’s fees if you win or lose, and the solicitor should discuss that with you.