No win no fee

You may have seen or heard this phrase used in a variety of advertisements about accident or injury compensation. The legal term is ‘conditional fee agreement’although ‘no win no fee’seems to be more widely used.

This system was introduced in 1995 to replace legal aid for compensation cases. It means that you do not have to pay a fee or expenses if you lose your claim for personal injury compensation.

If you win then the party at fault will have to cover the legal costs of the case which include fees and expenses. In other words, they have to pay your court costs.

Your lawyer or solicitor will also be entitled to an extra fee which is known as a ‘success fee’. This has to be paid for along with the other costs by the losing party.

Be aware that even though the losing party has to cover the court costs there may some costs which they are exempt from. If so then you will have to pay your lawyer or solicitor for these costs.

(Source: The Law Society)

Is this as straightforward as it appears?

Whilst it ensures that you can afford to pursue a claim for compensation what it may not tell you is that you have to pay the other side’s costs if you lose your case.

Basically, if your claim is unsuccessful then even though you do not have to pay your lawyer or solicitor’s fees, you will, however, have to pay the opposing side’s fees and expenses. An example of this is medical reports.

What usually happens is that your lawyer or solicitor will advise you to take out an insurance policy which will cover these costs if you lose your case. This is called ‘after the event insurance’.

Risks of no win no fee

The advantage of no win no fee is that it is a relatively easy system and one that reduces the risks for the client. A lawyer or solicitor will not take on your case unless he/she thinks there is a good chance of it succeeding.

So you know from the start if you have a good case for compensation or not before committing time and money.

Unfortunately, there may be firms or companies who are less then scrupulous when it comes to this agreement. They may work in conjunction with insurance companies and sell their policies, often at expensive premiums, for their clients.

Another risk is that of the ‘success fee’. If your case is successful then your lawyer or solicitor is entitled to their ‘success fee’ which is deducted from your compensation award. This can be set at a very high rate and makes a huge dent in your award.

In some situations it has led to clients receiving a tiny amount of money which is much less than they had expected to receive.

All of this applies to claims management companies as well.

The Compensation Act 2006 was designed to protect prospective clients against these risks by introducing a system of regulation of claims management companies.

(Source: www.legislation.gov.uk)

For more information about claims management regulation, visit the Ministry of Justice website (www.claimsregulation.gov.uk

).

Make sure that you understand fully the fees and expenses structure for your chosen lawyer, solicitor or claims management company. Ensure that you fully aware what you are paying for and why before you sign any contracts or similar documentation.