A no win no fee agreement can be a great way for someone to run their claim. But it is vital to understand what this means in terms of legal costs if you do ultimately succeed. Our brilliant team is here to help explain.
No win no fee solicitors take their fees only upon success and recovery.
- they can either take a % of the sums recovered under a damages based agreement or charge their fees at an uplifted rate under a CFA.
- they will charge more, but this is in exchange for sharing the risks.
Conditional fee agreement
A “no win no fee” arrangement historically referred to a conditional fee agreement. However, following changes to legislation from 2013, these have become less used. However, they can still be used on a “no win no fee” basis where the client is prepared to accept further costs arising in the event they are successful.
Damages based agreement
Alternatively, a more recent development is the advent of a damages based agreement, which provides for a “no win no fee” arrangement on the basis of a damages claim, where the solicitor takes a % of the damages recovered or the judgment handed down. This is also often referred to (particularly in the US) as a contingency fee.
Issues you should consider
So looking at how much a solicitor gets, we have to consider the purpose of a conditional fee agreement and a damages based agreement. This is mainly about risk and resources.
- the client may not want to, or cannot, directly incur legal costs in bringing or defending a claim (although they are far more popular for claimants). The client may want to fund the legal costs from the claim itself.
- from the solicitor’s point of view, this is about balancing out the likely increased costs s/he may recover against their perception of the risk of the claim or defence being successful AND the ability to recover such amounts if they are successful.
Under a conditional fee agreement a solicitor can receive an uplift (or “success fee”) of up to 100% of their standard rate charges, i.e. up to double their standard costs. These standard costs will be based on the time they spend on the matter, so for longer more drawn out proceedings (possibly up to trial) these may already be high legal costs which then are effectively doubled. The precise amount depends on the proceedings and time spent by the solicitor and his staff.
For a damages based agreement, the solicitor’s fees are solely dictated by his/her share of the judgment (except for expenses, including barrister’s fees, which do not usually form part of a damages based agreement). In litigation proceedings, the damages based agreement can claim up to 50% of the final award (including VAT).
However, for litigation proceedings, the advantage to the client is that the solicitor’s underlying base rate costs remain claimable even though they were never invoiced or due under the damages based agreement. Accordingly, the solicitor’s time costs will usually be vital to mitigating the impact caused by the fee due under the damages based agreement.
How we can help
At Francis Wilks & Jones we are extremely familiar with all types of funding models and will seriously consider entering into a conditional fee agreement or a damages based agreement, subject to a risk assessment. We can also discuss alternative forms of litigation funding applicable to your situation.
Please call any member of our commercial litigation team for your consultation now. Alternatively e mail us with your enquiry and we will call you back at a time convenient to you.