How does no win no fee work?

“No win No Fee” agreements work by enabling a solicitor to provide legal services at NO legal cost to you until your claim ends.  At this point the legal costs bill may be either on the basis of the solicitor’s hourly rates uplifted or a share of the sums recovered.

“No win no fee” is a popular definition bandied about in many advertisements by, for example, claims management companies and solicitors in the press.  The statement in itself is fairly self-explanatory, although it does not go into great detail as to the mechanics of the agreement you may enter into.

This statement usually describes the fee arrangement entered into between a client and his/her solicitor and is generally relevant to issued Court proceedings, or litigation, where there is an ability to clearly define “win”, although it can also apply to negotiated “wins” where a solicitor advises on and assists with claims or the liquidation of an asset, for example a shareholding in a small or medium-sized company.

The most common form of a “No win no fee” arrangement is commonly referred to as a Conditional Fee Agreement.  A Conditional Fee Agreement is an arrangement whereby a solicitor will not be paid his fees until conclusion of the instruction, with a “win” (to be defined) leading to such fees accruing at the solicitor’s standard rates plus a % uplift to reflect the risk taken by the solicitor, and the reward arising as a result.

With a Conditional Fee Agreement, or a No Win No Fee agreement, the client has little direct legal costs incurred in the ongoing legal proceedings and effectively has access to his/her solicitor without any immediate need to pay them.  However, this does not mean that such costs do not exist, but they are delayed pending the outcome of the proceedings.

However, if the client does not “win” there is no legal fee, although disbursements will have to be paid.  Please see our webpage here which provides more information on the risks attached to a Conditional Fee Agreement.

An alternative to a Conditional Fee Agreement may be a Damages Based Agreement which similarly offers legal cost funding on a “No Win No Fee” basis, but this agreement provides that the solicitor’s fees will be limited to a % of the eventual judgment obtained (and therefore it is only really suitable for a Claimant of Applicant in respect of issued or proposed proceedings.

This type of arrangement can be very useful to provide against circumstances where a “win” is achieved, but the “win” is not as high as expected, and therefore the associated legal costs will be reduced proportionately.  More information about Damages Based Agreements can be found here.

At Francis Wilks & Jones we have extensive experience of such arrangements, where clients have a strong claim or defence but no immediate ability to fund such legal costs and therefore need access to an arrangement that has a “No Win No Fee” aspect.  Quite often, shareholders wishing to exit a company and turn their shares into cash find this useful, as it can cover advice and assistance in negotiations and continue to be in force should there be a need to issue litigation proceedings to realise a shareholding.

Please call any member of our commercial litigation team for your consultation now on 020 7841 0390.  Alternatively e mail us with your enquiry and we will call you back at a time convenient to you.

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