No Win No Fee: It’s not a freebie!

Personal injury and other forms of compensation claims are commonly pursued these days using the no-win, no-fee system. It's also known by the more formal name of Conditional Fee Agreement (CFA).

What Is No-Win, No-Fee?

No-win, no-fee was introduced in 1995 when Legal Aid was disallowed for personal injury claims. It is a fairer system because it relates to the chances of a successful outcome rather than the means of the client. It's particularly important if the party being sued is financially wealthy but the claimant is not because otherwise they would probably be put off taking on the risk of a case that might become very expensive.

Solicitors use their professional expertise to look at the merits of the case and can advise if it's worth pursuing or not. If a solicitor thinks there is little or no chance of a claim being successful then they won't take it on, but if it does appear to have a chance of success then a no-win, no-fee solicitor will probably take it on. Another benefit of this system is that it helps to prevent the courts becoming clogged up with claims that are unlikely to stand a chance of being won.

Is It Guaranteed to Be Completely Free?

This is an attractive method of taking legal action because it is a cost-effective way to make a claim. However, potential claimants need to be aware that it is not necessarily a completely free way to try and get compensation and there may well be some associated fees.

The main point is that clients will not face any fee charges from their solicitor for the time they've spent on the case, unless the case is won.

If your claim is successful then the solicitor is fully entitled to make a charge for their time, plus an extra fee which is called a success fee. However, as the winning party it is almost certain that these charges will have to be fully paid by the losing side.

A personal injury compensation claim does generate other charges, including court fees and the cost of producing a medical report. These are known as disbursements. Once again, it should be the losing party that has to pay some if not all of these costs.

You, however, will be liable to pay your solicitors for any costs that the court doesn't order the losing party to pay.

So what happens if you lose the case? There will be no charge for the time your solicitor has spent on the claim but it is likely that you will have to cover the costs of the other side and your own disbursements.

To avoid your being hit with a large bill if you lose the case your solicitor can arrange an insurance policy to cover the risk. Called an 'after the event', or ATE, insurance policy, this covers you against the costs other than solicitors' fees that you might be liable for if you don't win your case.

This is a contribution by British blogger Zoe, on behalf of Hughes Carlisle, a firm of conveyancing solicitors in Liverpool.