What is no win, no fee? How does it work?

Many UK law firms offer their services on a “no win, no fee” basis – but what does it mean? Before seeking legal advice, you should make sure you understand the agreement you have with your solicitors regarding the cost of the work they are to do for you. A ‘no win, no fee’ agreement is one such common arrangement. This article explains no win, no fee agreements as well as After the Event (ATE) insurance.

‘No win, no fee’ is a common name for a Conditional Fee Agreement (or CFA) between a client and their solicitor. In short, it means that if a claim is unsuccessful, then as long as the client has complied with the agreement, they will not have to pay any of their solicitor’s legal fees.

In exchange for this arrangement, it is common that a solicitor will seek a percentage deduction of the damages recovered if the client does win the case.

CFAs were introduced under the Conditional Fee Agreements Order 1995. Prior to this, clients typically paid privately on a monthly basis during their case. With an alternate method of funding a claim using legal aid declining massively in recent years, CFAs are designed to help offer legal services to everyone, regardless of their ability to pay legal fees privately or in advance.

No win, no fee agreements offer a good solution to both claimants and solicitors. claimants can get legal representation without any upfront costs, and solicitors can recover their costs if the claim is successful.

In practice, ‘no win, no fee’ agreements often mean that claimant solicitors can only proceed with claims that have a reasonable chance of success (typically greater than 50%). Legal processes are usually complex, time-consuming, and expensive. If a solicitor invests time and money into a case that loses, then they are left out of pocket for their efforts.

As detailed above, in exchange for the risk of potentially being left out of pocket, it is common for a damages deduction to be part of the agreement made within the CFA.

In some cases, even when the claim is successful, the solicitor may not cover all their fees. In these scenarios, the solicitor can take an agreed deduction from the claimant’s compensation to off-set their outstanding costs.

For example, a common agreement may include a 25% damages deduction. This means that if a claimant recovered £4000, then 25% of that compensation would be deducted for costs and the claimant would receive the remaining £3000.

It is very important that you know what the damages deduction of your ‘no win, no fee’ case is before you start a claim to avoid any confusion down the line. At Pabla & Pabla, we will always agree a deduction from the damages fee with you before we start work on your claim.

The short answer is no. However, there are a couple of caveats worth being aware of.

Firstly, it is possible that some law firms may have hidden charges or deductions above the rest of the market which would be deducted from compensation. At Pabla & Pabla we are committed to being transparent with our fees and agreements and we welcome all conversations with our clients to ensure they understand the agreement and they know exactly what may be deducted from any compensation recovered.  

Secondly, it is true that a client can be liable for fees if they refuse to cooperate with their solicitor. If a client refuses to take the advice of their solicitor or will not comply with their reasonable requests, then the CFA will be cancelled, and the solicitor is legally entitled to charge their client for their work.

At Pabla & Pabla, we are happy to discuss our agreements up front with our clients and always make sure that every step of the legal process is explained. Ultimately, we are here to help you seek justice and right a wrong you have suffered.

Anyone pursuing a claim, whether using a ‘no win, no fee’ agreement or other arrangement, should also consider After the Event insurance (or ATE). ATE is an insurance product, which covers a client from having to pay for any costs outside of their solicitor’s fees if their case is not successful. This includes court fees, barrister fees, expert fees and defendant legal fees.

As a ‘no win, no fee’ agreement can only cover your solicitors’ fees, it is important for a client to strongly consider ATE cover to protect them from having to pay other fees incurred when running a claim.

At Pabla & Pabla, we strongly advise all clients to take out ATE cover for this reason.

The cost of the insurance product, its premium, is usually only paid out if a claim is successful and is deducted from any compensation received. If a claim is not successful, then typically the ATE premium does not have to be paid.

In short, without ATE cover, a client could be liable to pay additional fees if their claim is unsuccessful.

• A ‘no win, no fee’ agreement is technically a Conditional Fee Agreement. Under a CFA, if your claim is unsuccessful, you’ll pay nothing.
• CFAs were designed to help low-income people seek legal representation.
• You should strongly consider After the Event (ATE) insurance for your CFA claim.
• You should always understand exactly what fees will be taken if your case is successful.