No Win No Fee… No thanks?

The system which has become known as No Win, No Fee was originally introduced in 1990 with the best of intentions – to improve access to justice for people who could not afford legal fees and to reduce reliance on taxpayer-funded Legal Aid. 

However, in recent years it has been shown to be vulnerable to unscrupulous practices. The No Win, No Fee system (more formally known as Conditional Fee Arrangements or CFAs), allow lawyers to only take payment if they win, with costs and a success fee paid from the compensation. 

CFAs have become more and more commonplace with legal firms specialising No Win, No Fee bombarding us with advertising to encourage people to contact them about everything from potential mis-selling from car finance to loans and personal injury claims, offering to secure you compensation without any financial risk.

Although this sounds a great deal for consumers, things don’t always work out that way, and some firms have left people finding themselves liable for unexpected costs and thousands of pounds out of pocket. Disputes and Litigation Solicitor Rachel Macwilliam outlines the key dangers of No Win, No Fee agreements.

Key Dangers of No Win, No Fee Agreements

• Liabilities When Losing: No Win, No Fee agreements only apply to your own solicitor’s fees, so although you may not pay your own solicitor, you can be liable for “disbursements” (court fees, expert reports, medical records). If the case fails, you might also have to pay the other side’s legal costs.
• Reduced Compensation: When winning, a “success fee”, which is a percentage of your solicitor’s costs, is deducted from your damages, meaning you do not receive 100% of the awarded compensation. In the much talked about 2019 group action against the Post Office, the 555 subpostmasters achieved a landmark victory but received only around 20% of the total settlement amount.  Your agreement may also require you to make up any shortfall between the costs that are recovered from your opponent and the costs that are actually incurred.
• Hidden Costs and Insurance: You may need to pay for After The Event (ATE) insurance to protect against the other side’s costs, which can be expensive.
• Case Selection Pressure: Solicitors only take cases with a high likelihood of success (usually >51%), meaning they may drop your case if it becomes too difficult or risky.
• High Costs on High-Value Claims: For larger claims, the percentage deduction for the success fee can be a very substantial amount of money.
• Misleading Marketing: Some firms may not fully explain the risks, creating false, “no-risk” narratives that can leave you with unexpected bills if the case fails.

BBC Radio 4 investigation – No Win, No Fee…No thanks
A recent BBC Radio 4 File on 4 investigation, found that the newest target for these unscrupulous firms is for housing disrepair claims.  Cold callers knock at the door saying they are working on behalf of a firm of solicitors who are dealing with claims on behalf of council tenants whose properties are affected by mould and could bring a disrepair claim on a No Win, No Fee basis.  One social housing provider in the South of England with an estate of 85,000 homes has said they had seen a 375% rise in the number of legal claims launched by tenants in the last 5 years.  You can listen to the programme here.

Penderlaw Solicitors do NOT offer No Win No Fee agreements.
At Penderlaw we are proud of our reputation as a straight-talking, friendly and efficient firm of solicitors. This approach naturally extends to our transparent pricing policy. Costs for our Dispute Resolution Team are charged at an hourly rate. As every dispute is different, final costs depend on a number of variables such as your opponent, complexities, facts and the type of matter on which you are intending to instruct us. Further information on our pricing can be found on the pricing page of our website.

Get in touch
If you would like to speak to us about a dispute, our friendly and experienced team would be pleased to hear from you.  You can contact us on 01872 241408 or email us info@penderlaw.co.uk