No win no fee: legal costs, risks and hidden fees

You may have heard of the no win no fee system, often promoted as a way to access justice without upfront costs. In simple terms, a solicitor handles your case and only gets paid if you win. This arrangement is particularly common in personal injury claims and civil disputes. Before committing, it’s essential to consult a solicitor who can clearly explain the potential costs and risks involved.

To find out more, keep reading.

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What is the “No win no fee” system in the UK?

The no win no fee system is based on a simple yet appealing principle: it allows individuals to pursue legal claims without having to pay solicitor fees upfront. In practice, your solicitor covers all the costs associated with your case and only charges fees if you win. If your claim is unsuccessful, you usually won’t have to pay for their services.

Key points to understand:

• No win, no payment: You don’t owe your solicitor anything if your case is lost or dismissed.
• Initial costs covered: The solicitor funds the expenses involved in handling your claim, such as administrative fees and expert reports.
• Conditional payment: If successful, the solicitor takes a percentage of the compensation awarded, known as the success fee.
• Common use: This arrangement is especially popular for personal injury claims, accidents, and certain civil disputes.
• Legal framework: In the UK, these agreements are governed by Conditional Fee Agreements (CFAs) and the LASPO Act 2012, which protect clients and ensure transparency.

What are the actual costs of a “No win, no fee” arrangement?

How much does no win no fee cost? Although a no win no fee arrangement may seem free at first glance, there are several potential expenses you need to be aware of before proceeding:

• Success fee: Your solicitor will take a percentage no win no fee of the compensation awarded, typically between 25% and 35%. This fee covers their work but reduces the final amount you receive.
• Administrative and case management fees: You may be charged for certain costs related to managing your case, such as postage, document copying, or coordination between parties, regardless of the case outcome.
• Expert reports: Medical or technical expert reports necessary to support your claim might remain your responsibility, even if your claim is unsuccessful. These can sometimes be a significant part of the overall cost.
• Opponent’s legal costs: If you lose, you could be ordered to pay the other side’s legal fees. This can be a substantial financial burden unless your solicitor has arranged After the Event (ATE) insurance to cover this risk.

When can you use a ‘No Win No Fee’ agreement?

No win no fee agreements are mostly used in cases where the claimant is seeking financial compensation. They are particularly common in the following situations:

• Road traffic accidents, whether you were a driver, passenger, pedestrian, or cyclist.
• Workplace accidents, especially when caused by employer negligence or unsafe conditions.
• Medical negligence or professional errors in healthcare settings.
• Slips, trips or injuries in public or private places due to poor maintenance or safety failures.
• Consumer disputes or other civil claims involving loss or personal harm.

What are the dangers of a ‘No win no fee’ agreement?

Despite the fact that this type of agreement may seem appealing, there are several important risks you need to be aware of. Many people discover these dangers of no win no fee arrangements too late:

• High success fees: If you win, your solicitor may take between 25% and 35% of your compensation. For instance, if you receive £10,000, you might only keep £6,500 after these no win no fee fees are deducted.
• Case refusal: If your case is deemed too complex or the chances of success too low, some solicitors may decline to take it on under a ‘no win no fee’ arrangement.
• Complex contracts: The Conditional Fee Agreement (CFA) can contain technical legal clauses that are hard to understand without proper guidance. Misunderstanding these terms can lead to unexpected costs or disputes.
• Withdrawal penalties: If you decide to stop your claim partway through, you may be charged substantial fees for work already done, even under a ‘no win no fee’ arrangement. Some clients face bills of thousands of pounds when they choose to discontinue their case.
• Lack of control over case strategy: Your solicitor may prioritise quick settlements over maximum compensation to reduce their own risk, potentially leaving you with less money than you deserve. The case of Worcestershire businesswoman Mandy Neal, reported in The Times, illustrates how no win, no fee battle cost me £300,000. She had to sell the contents of her home to meet legal costs after winning a negligence claim that was settled for around £125,000, but left her facing a costs shortfall exceeding £150,000.