Conditional fee agreement

Conditional fee agreement

No win no fee

Conditional fee agreement is the proper name for “no win no fee.” It means your own solicitors fees are only payable by you in the event of success. Success is defined in the agreement, but in compensation cases it usually means recovering a compensation payment in your favour. There is a lot to understand.

If we set up a conditional fee agreement, you are liable to pay my hourly rate only in the event of success. If we do not succeed, I am paid nothing for my time. Regardless of success you are liable for the disbursements I incur and the costs and disbursements of the other side if we lose. To cover that risk I will advise you to take out insurance, called after the event insurance.

After the event insurance covers your risk of paying your own solicitor’s disbursements, and the costs and disbursements of the other side in return for a premium. The insurer is banking on your own solicitor’s judgment. Surely they would not be running the case if it is not going to succeed? Well that is usually the outcome, but the odd one goes wrong, and you will be glad the insurance was taken out. The premium for this insurance can be recovered from the other side if the case succeeds, and as many after the event insurers will wait until the end of he case to be paid, there is no good reason not to take out this insurance. The only reason why this insurance is not complete is that the level of cover can be limited. An indemnity level will be set at the outcome, say £25,000, and that is the maximum the insurer will be liable to pay. This level can sometimes be increased, but there is no guarantee and an increase can be expensive, and not necessarily recoverable from the other side. Best you get the level of cover right in the first place. Once you have the policy the cover is reviewed. The insurer must always be satisfied the case has reasonable prospects of success, so if the balance tilts away from you, the insurer may pull out. Rather like insuring a car, but having to phone your insurer if the weather forecast is bad. On balance you ought to have this insurance, on the basis the why not argument is stronger.

The purpose of this arrangement is straightforward, but the agreement and the insurance make it feel rather complicated. It does require patience and experience to walk you through this arrangement, and it is not something to sign up to after only a quick chat on the telephone.

If you have legal expenses insurance that is a simpler alternative. If you are a trade union member then follow that route. The same protection can be put in place with a conditional fee agreement, but it does need proper explanation.

Success fee

A success fee can be sought by a solicitor acting under a conditional fee agreement. This is the incentive offered when legal aid was replaced. It allows a bonus fee in successful cases to make up for those which lose.

You will only be liable for the success fee in the event of success, and a reasonable success fee should be recoverable from the other side.

At the outset of the case you will be told about the risk assessment which sets the success fee at a maximum of 100 per cent. There are rules which dictate how much of this success fee can be recovered from the other side, so do make sure you understand what is going to happen with the difference.

Many solicitors will set up the arrangement to allow maximum recovery from the other side, with no intention that you will actually pay anything. However if they do not recover as much as they wanted they can turn to their client and ask that they pay the difference. A promise that you will receive 100 per cent of your compensation does not help you here, as you are receiving 100% of your compensation plus a bill.

We will explain how the costs of personal injury and accident cases are recovered from the other side, and that will help clear the picture.

Author: Mark Thompson

Personal injury and accident specialist solicitor

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