Many people across the UK will often wonder if a solicitor will take on their legal work on a No Win No Fee basis. Glossy television adverts have thrown those four words around for many years creating a sense of “I don’t have to pay anything if I lose” and a rose-tinted view of what No Win No Fee means.
What is a No Win No Fee agreement?
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.
Best examples of No Win No Fee agreements
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.
Comment
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.
How can Nelsons help?
At Nelsons, we 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 a member of our expert Dispute Resolution team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form, and they will be happy to assist you.
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