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What does ‘no win, no fee’ really mean?
It is a deceptively simple phrase. On one level it means (as the name suggests) solicitors are paid nothing for their work if they lose (but can charge more if they are successful). Until relatively recently lawyers were not allowed to have any financial stake in the outcome of the case. Until 1967, if a lawyer was to take a slice of the spoils it was a criminal offence (known as ‘champerty’).
Please note that the government is expected to radically overhaul ‘no win, no fee’ under its The Legal Aid, Sentencing and Punishment of Offenders Bill.
There are two types of ‘no-win, no fee’ arrangements:
Conditional fee agreements. This is the only type of ‘no-win, no fee’ agreement that is allowed the vast majority of cases. It has two important features:
- the success fee. Your solicitor is allowed to charge extra so as to reward his risk-taking in the event of a successful result which can be as much as double his fees. If you don’t win, the losing side (generally speaking) will pick up this expense.
- after the event insurance. The general principle of the UK courts is that ‘the loser pays’. You will not have to pay your own solicitors’ costs win or lose under a ‘no-win, no fee’ agreement but you could be liable for your opponents costs. So for the price of the insurance premium, you can take out a policy to cover the risk as well as other outgoings such as court fees, medical report to police reports. Normally you don’t actually pay anything because the cost is generally wrapped up in the insurance policy.
Contingency fees. This is much more straightforward. The solicitor takes as his be a slice or straight percentage of the award. At the moment such agreements are limited to what are known as non-contentious actions (i.e. not involving court proceedings) and are especially popular in employment tribunals.
The introduction of the present style of conditional fees under the Access to Justice Act 1999 has not been without controversy. The legislative change prompted a flood of non-lawyer entrepreneurial companies which until recently weren’t regulated. Many legitimate accident victims have had their damages devoured by overpriced policies, and many worthless claims have also been encouraged by companies trying to make a quick buck.
‘No win, no fee’ does not mean ‘win, no cost’ and you should be clear that, whatever happens, you’ll get damages back intact. Also resist hard-sell marketing. You are probably not going to get quality advice if your introduction to your lawyer begins with a youth with a clipboard in a shopping centre or via a flyer in a hospital waiting room entitled ‘Where there’s blame, there’s a claim’.