What is a no win no fee? It is an agreement between a solicitor and their client that the solicitor will only get paid if they ‘win’ the case.
Bringing a claim (litigation) can be expensive and risky. Usually you will need to incur that expense and that risk when you have not been paid and cash flow is bad. That is just the point when you have less money and less risk appetite. Lots of claims don’t get made for these reasons – however good they are. That’s why no win no fee agreements Are not only good, but essential. We always offer no win no fee agreements when we recommend to someone that they bring or defend a claim. For many cases there will be a charge to review the case and give preliminary advice before we can decide whether we can offer a no win no fee.
We are better able to understand and assess that legal risk posed by litigation and we use our expertise to help businesses recover money they would normally write off. Writing off good claims or paying a solicitor irrespective of success both seem wrong. We specialise in fixing those problems. Having a good no win no fee agreement in place reverses the power balance.
We believe that we shouldn’t ever recommend that our clients bring or defend a claim unless we are willing to share in the risk and only get paid if the client wins.
Offering a No Win No Fee is not a special situation for us, it is the norm.
Why would you trust a solicitor who advises you to litigate but refuses to risk their own fee on the outcome of the case?
Because we are sharing the risk you can be sure that our advice is commercial and realistic.
A No Win No Fee is not always the best option and we will examine all the other funding options including a fixed fee, damages based agreement or a normal retainer.
If we get the litigation funding structure right our clients can punch above their weight and, working together, we have the best prospects of success.
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No Win No Fee in Commercial Cases – The Truth
Lawyers are unpopular. They’ve held this dubious distinction for so long they even have a whole category of jokes that raises a wry smile even in those of us who actually work in the profession.
Yes, along with politicians, bankers and parking attendants, the legal profession is somewhat maligned. Why? Costs, perhaps (we mean definitely), a widespread perception that lawyers unnecessarily complicate matters, even a sense of separateness, perhaps – a lawyer/non-lawyer divide. From Charles Dickens onwards, literature has been rife with lawyer bashing. And, there’s no escaping that formerly and often currently, should litigation become necessary, you are obliged to settle legal fees regardless of the outcome.
Enter the No Win No Fee concept. With its origins in the United States, the “Conditional Fee Agreement” was introduced into the UK in the mid 1990’s for personal injury claims. Its impact was substantial: fall off a ladder or slip on wet floor and you can do something about it, and importantly, it carried a low risk. Win and you win big. Lose, and you pay practically nothing. Here, have a large cheque and stand up for your consumer or employee rights. Where there was blame there was, literally, a claim.
It sounded very simple and indeed it was, perhaps simplistic. Hailed at the time as a better, more robust access to justice, the No Win No Fee concept spawned our so-called “compensation culture”: a whole industry of worthy folks who could get your money back for you, gratis.
In the field of personal injury claims, the legal profession’s reputation went into a nose dive:
- The term “ambulance chaser” was coined, or rather in came into widespread usage: an unpleasant professional slur describing a lawyer who seeks clients affected by accident or injury, encouraging them to sue.
- “Claims farmers” threw their hat into the ring. Personal injury companies with zero legal background, expertise or qualifications could – and still do – claim to offer No Win No Fee agreements, but with heavily inflated charges in the services on offer.
- Without undue comment on our part, the “uplift” fees charged by lawyers in many CFAs to compensate against potential losses did not exactly go down well in the media, or with the general public.
So, where are we now? No Win No Fee for Commercial Litigation
No Win No Fee has come full circle.
All legal firms are regulated. They are bound by strict, ethical codes of conduct so whilst claims management, debt collectors and recovery firms, as well as the afore-mentioned “farmers” may appeal, we would advise extreme caution.
Litigation carries risk and can be expensive, therefore qualified lawyers and only qualified lawyers with a track record of successful commercial litigation should be part of anyone’s legal short list. And yes, we would say that, but believe us, we know.
No Win No Fee. A Good Thing.
If your business is owed money being asked to settle legal fees regardless of the outcome of your case will be nothing short of disastrous. For most business owners, their cashflow cannot support expensive litigation. Sharing the risk is a compelling argument. A solicitor who refuses to share that risk in case of a loss? Not compelling.
Consider experience, knowledge, skill and confidence of the person sitting opposite you. A lawyer should never accept a case that seems unwinnable, therefore potential claimants must have a strong degree of trust.
At Helix, we strongly believe that No Win No fee is a legitimate and more importantly, sometimes the only viable fee structure. Indeed, a win-win fee structure. Our open, democratic approach underpins all our work and we offer this because we have an in depth understanding of commercial litigation and its myriad complexities.
By the way, although this article concerns No Win No Fee, a fixed fee structure may be an excellent alternative. Knowing in advance what your legal costs will be manages your expectations and helps to keep your business on track.
In conclusion? A good solicitor will listen to you and evaluate your needs. An excellent solicitor will evaluate each and every risk in your potential case and offer to share in it.
FAQ
No Win No Fee means that you only pay the solicitor’s costs if you are successful. Sometimes they are called a conditional fee agreement or CFA. The solicitor works on your case without being paid until the agreed result is achieved. Having a No Win No Fee agreement massively reduces the risks of bringing or defending a claim. Usually the solicitor will include a success fee in No Win No Fee agreement. A success fee is an agreed increase to the solicitor’s usual hourly rate to compensate them for the risk they run of not getting paid under a No Win No Fee agreement. This success fee can be up to 100% of the normal fee. In some cases a solicitor may offer a No Win No Fee or CFA without charging a success fee.
You pay more if you win but keep less of your winnings. The solicitor gets paid more if they win to compensate them for the risk that if they lose they aren’t paid. If you lose you don’t have to pay your own legal costs but will likely be ordered to pay your opponent’s costs.
A No Win No Fee or CFA is not a percentage of the damages that is known as a Damages Based Agreement or DBA. A No Win No Fee provides that if client wins then they are liable to pay the solicitors time cost plus a success fee of up to 100% no matter what the damages. In many cases this eats into damages because the success fee is never recoverable from the opponent and only about 75% of the normal costs are usually recoverable. By way of example, if under a CFA with a 50% success fee you are successful then you would be liable to your solicitor for 150% of their costs on a time basis. If those costs were £40,000 then you would have to pay your solicitor £60,000 if you win and nothing if you lose. The court would likely award you about 75% of your costs before the success fee (75% of £40,000=£30,000) and so you would have unrecoverable costs of £30,000 – the difference between what you owe your solicitor if you win (£60,000) and the amount your opponent is ordered to pay for your costs (£30,000). If your claim is not at least £100,000 it may be that the unrecoverable costs of a No Win No Fee agreement are too high. In each case you and your solicitor should work through the best and worst case scenarios to see if a CFA is right for your case. Where damages are small then Helix Law will consider a CFA with no success fee so that the litigation is commercially viable.
Ask them to set out probable outcomes with worked examples of what you will receive after paying for costs. Use reputable review sites and ask for references. No Win No Fee solicitors in the personal injury field have a very bad reputation. In commercial claims there are far fewer solicitors willing to take on claims under a CFA or No Win No Fee.
Legal Aid and No Win No fee are completely different. Under Legal Aid, if you qualify, the costs are met by the government and recovered from your opponent. Also, you are usually protected from having to pay the opponent’s legal costs if you lose.
The general rule is the loser pays around 75% of the winner’s costs. However, in Small Claims you cannot recover costs or be ordered to pay them.
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