No Win No Fee – the Facts

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I was having lunch in my favourite restaurant last Sunday when I had the misfortune of overhearing a conversation taking place on the table next to me.

A group of respectable looking fifty-somethings suddenly started talking about “No Win No Fee Agreements” and one of the group, a bespectacled grey haired fellow whom I mistook for being wise and worldly, commenced a rant which was so ill-founded it made me want to throw my passion fruit panna cotta at him.

“Do you know”, he said, “these lawyers talk about ‘no win no fee’ like they don’t get paid anything if they lose, when in actual fact that is not true”.

“Really?” questioned one of the other table guests.

“Yes”, he continued.  “What happens is that the lawyer charges the other side a ‘success fee’ which is a highly inflated percentage of costs.  Whether he wins or loses doesn’t matter because they still get the success fee.  That is why it is costing the NHS millions every year in legal fees, because they have to pay these success fees”.

“That is unbelievable”, said another guest.

It is unbelievable.  It is unbelievable because it is utter rubbish.  The exchange of seemingly educated people led me to think perhaps the general public are actually unaware of how these agreements work.  So, people of Britain, prepare to be educated!

There is no such thing as a “No Win No Fee” Agreement.  It is actually called a “Conditional Fee Agreement” or “CFA”, but understandably the colloquial title is easier to understand.  It was introduced by the Government when they removed Legal Aid for personal injury claims.  The plan?  Make Solicitors bear the risk of loss.  If an injured person may end up having to pay his Solicitor he may well not claim what he is entitled to, and in a society used to freebies from Legal Aid that just would not work, so the idea was to create a system where a Solicitor could run a case without charging a client anything.  If the Solicitor wins the case he gets paid his costs by the opponent in the usual way.  If he doesn’t he gets paid nothing.  That is right, nothing.  There is a good reason why people call it “No Win No Fee”.

Why would a Solicitor take on such a risk?  After all, it is the client’s case not his so why should he fund it?  The answer is the “success fee”.  A Solicitor running a case on a CFA is entitled to charge a percentage uplift on his costs if he wins, and this can be anything from 5% to 100%.  So a winning Solicitor will be paid for the work he has done on an hourly rate, with a nice little bonus to congratulate him on winning.  It also allows him to represent people with worthy cases who would be put off by having to pay the fees themselves throughout the case.

In straightforward cases the uplift will be low, and indeed in some cases it has been fixed by the Government (12.5% in road traffic cases, 25% in accident at work cases), but if the case goes to a trial the Solicitor can claim up to 100% of his base costs as a success fee if he wins.  Suddenly, taking the risk seems a lot more attractive.  In straightforward cases the relatively modest uplift does little more than compensate the Solicitor for having to wait until the end of his case for payment, but in riskier cases it rewards the Solicitor for taking on his client’s risk and winning the case for them.  It also “punishes” the loser for resisting the case to a trial when they should not have done so, thereby encouraging early settlement of cases.

So there you have it, CFA’s in a nutshell.  In almost all cases the client pays nothing for the work done whether the case is won or lost, and the basic exceptions are left to extreme circumstances such as when the accident is a fraud or the client loses interest and fails to cooperate with the lawyer.  Now you know what they involve, book yourself a table in a local restaurant and talk loudly about exactly how CFA’s work so that we can spread the word.  If you like, whilst you are there you could also start ranting about how the Government wants to change all this so that you have to pay the success fee (see my other blog post, “No problem Sir, that will be 25%”).  Now that is a rant worth making…

David Mayor

About David Mayor

David is Head of the Preston Office's Civil Litigation team and deals with all types of private Civil Court disputes. David’s blogs cover his expertise in all aspects of personal injury law from low value Road Traffic Accidents right through to complex large loss claims. David also writes and has a vast array of experience in Public Liability (trips and slips), Employer's Liability (accidents at work), and Motor Claims (motor vehicle accidents, pedestrian accidents).
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One response to No Win No Fee – the Facts

  1. Pk Simpson says:

    The percentage increase on the fee will be decided by the solicitor and will be detailed in the agreement that you sign at the beginning of the case. The percentage will be decided as a result of a risk assessment considering the complexity of the case and the likelihood of winning your case.

    Best Regards,
    Sydney Lawyers

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