What is a No Win No Fee Agreement?
Otherwise known as a Conditional Fee Agreement, No Win No Fee means how it sounds : If you are unsuccessful in your claim, or even you lose your claim, you will not have to pay anything for your legal costs.
In certain circumstances, we may ask that you pay for the cost of disbursements (monies we have to pay to third parties, eg the cost of obtaining copies of your medical records), but even then, we will often cover the cost.
This means that financial constraints should not stop you from getting a solicitor’s help to make a claim for compensation for your losses and damages.
“No Win No Fee” is the term for a Conditional Fee Agreement (CFA). In very simple terms, this is a contract between the solicitor and their client to charge their fees at the end of the case, depending on the outcome. If the case is lost then the client does not pay their solicitor’s fees. If the case is won the client pays the solicitor’s fees plus an uplift on the fees, known as a “Success Fee”, at the end of the case. The success fee can be anything up to 100% of the base costs and is determined by the solicitors on a risk assessment of the case. It is charged to account for the risk taken by the solicitors.
In the past, the success fee was recovered from the opponent as part of any costs orders. Since 2013 you are no longer able to recover the success fee from your opponent. This means that you are now liable to pay the success fee from the damages you recover.
So let’s look at some numbers and the best case scenario.
- You have a claim worth £50,000 being funded on a CFA with solicitor’s costs up to trial of £35,000, plus a 100% success fee. You win your case and get a costs order against the opponent for 75% of your costs (because you never recover all your costs). Your solicitor bills you £70,000, being the costs plus the success fee. So you have a shortfall on your costs of £8,750. You also have to pay the success fee of £35,000 in full. Your total out of pocket expense is £43,750. Once you’ve paid this, you are left with £6,250 from your damages to go home with.
- On the flip side, you don’t have a CFA to fund your case, you pay as the case progresses and win your case with a 75% costs order against the opponent. You have paid your solicitors £35,000 during the course of the case, recover 75% of those costs from your opponent and recover damages of £50,000 leaving you with £41,250 to go home with.
Which One Would You Choose?
If you lose the case on a CFA, yes there is “no fee” to pay your solicitors BUT you will usually be ordered to pay your opponent’s costs, so you still have a bill to pay. Your opponent’s costs can be similar in amount to your own solicitor’s costs that you didn’t have to pay. It is possible to pay for insurance to cover the cost of losing a case, and sometimes this can be arranged on a no win no premium basis, but if you win, the premium is again paid out of your damages. The ins and outs of insurance is a blog for another day.
Whilst CFA’s remain a very useful means of funding your commercial disputes, it is less attractive in lower value claims given the amount of damages you are left with at the end.
So “No Win No Fee” is not quite what it seems but in some circumstances can give access to the Courts where otherwise this might not have been an option.
Geoffrey Lurie deal with a broad range of commercial disputes and can offer CFA’s to fund them in certain cases. We will always discuss funding at the outset of the case and give you the options for you to choose the best form of funding for your case.
For more information, please contact our expert team of solicitors and they will be happy to assist.