No win no fee

No win no fee

No win no fee is not an accurate term, as it does not tell you the whole story. The whole story might be a little technical, but until you have heard it you will not understand. Your only question is “Will it cost me anything?” to which the answer will be “It depends.” So read the whole story and understand.

In our compensation system the successful claimant usually receives compensation and has their legal costs paid by the other side, the defendant. The other side is usually insured. Having your costs paid is not an automatic right. It is either built into any settlement you reach, or it is at the discretion of the trial Judge. There is no guarantee, but usually costs follow the event, which means the loser pays.

The amount of the costs you can recover depends on what is called the indemnity principle. The party paying costs has agreed or is ordered to reimburse you for the amount you are contractually bound to pay to your solicitor. Your solicitor cannot just present a bill and expect a cheque. So you must be liable to pay your solicitor, as without that liability you cannot be indemnified by the other side. They cannot cover your bill if one does not exist.

So when you sign up to a “no win no fee” agreement, you will be signing a document which says you will pay £X per hour plus VAT in the event that the case succeeds. You become liable to pay when your case succeeds and the other side will effectively pick up your bill. It is rare for a solicitor to be paid for every hour they have spent on your case, so some will look to you for the costs not recovered from the defendant (often called the shortfall).

What about the possibility that your case fails? The answer is qualified one way costs shifting. That is possibly the ugliest phrase I have heard, but its meaning helps you. Since 2013, an unsuccessful personal injury claimant is not liable for the legal costs of the defendant. This does not apply if your claim is shown to be fundamentally dishonest, which can include exaggeration.

There is a risk you will have to pay some or all of the defendant’s legal costs if you do not beat an offer made on liability or compensation. In simple terms, if you are offered £20,000, refuse it and get less, you will pay the defendant’s costs since the date of the offer you should have accepted. Your liability is limited to the compensation you actually recover. So failing to recover compensation will not bankrupt you, but you could lose all of the compensation. These offers are often called defendant Part 36 offers or Calderbank offers.

In the above situation, you will not have pay your solicitor for their time, but you will be responsible for the expenses incurred on your behalf.

Can you insure against the risk of paying the legal costs of the defendant and your solicitor’s expenses? You may have legal expenses insurance, as part of an insurance policy, a bank account, a credit card or some professional association. If you are a trade union member, it is very likely you will have legal support as a membership benefit. If you do not have any of the cover noted above, you may be able to take out after the event insurance.

You can insure the risks in return for a premium, the insurer relying 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 is usually paid by you if the case succeeds. Insurers will often wait until the end of he case to be paid. The only reason why this insurance is not so good, is that the cover it provides can be limited. An indemnity level will be set at the outset, 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. Best you get the level of cover right in the first place. Once you have the after the event insurance in place, the insurer will review its position as the case proceeds. 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, you might think. Such insurance will not allow you to press on with a case in the face of common sense and legal advice, but it does reduce the worry about litigation. Have your solicitor investigate the cost and the cover available, as such insurance may well suit you.

Success fee

You may have signed up to what you think is a no win no fee, but were you told what would happen if your case is successful? The vast majority of personal injury solicitors will charge a success fee. The theory is, that a risk is being taken, so if the case wins, the solicitor ought to be rewarded for taking the risk. If the case has been won, the solicitor will recover most of their fees from the defendant, then you may have to make up the shortfall. The success fee must be no more than 25% of the compensation for your injury and past financial loss. That can be a large amount of money, so be sure to understand your agreement with your solicitor.

I did warn that no win no fee was not the whole story.

Related content

Personal Injury trusts and how I can help
Personal injury trusts guide

Protect your compensation

Receiving interim or final compensation payment?

You may need a trust to protect benefits and local authority care.

My contact details

01392 314086 (landline rate)

07785 342483 (mobile rate)

M-F: 9am-5pm, S-S: Closed

Get in touch