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Is there a catch with no win, no fee claims?

Carl Waring

Carl Waring

|  7th May 2021  |

Whats the catch with no win no fee

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Updated 22nd February 2024

Legal Aid was available for personal injury and medical negligence claims until the end of the last century.

With the benefit of legal aid, the injured victims of another person’s negligence could pursue their injury claim, knowing they would not have to pay their own solicitors’ costs, whether they won the case or not. Legal aid also protected clients from being ordered to pay the other side’s costs if their claim was unsuccessful.

The position changed in 2000 when the government abolished legal aid for most personal injury cases. (Legal aid is still available in a very limited number of  clinical negligence cases.)

Since 2000, fee agreements, best known as No Win No Fee agreements have been used to fund personal injury claims.

How does No Win No Fee work?

There are plenty of guides about how No Win No Fee agreements work. Mooneerams Solicitors‘, No Win No Fee guide is easy to follow and answers the most frequently asked questions about how No Win No Fee compensation claims work in practice.

Here is a brief explanation of what happens when you sign an agreement to pursue a No Win No Fee accident claim.

  • If you lose your case, you will not usually have any legal fees to pay; either to your opponent or to your own solicitor. Hence, the term ‘No Win No Fee’.
  • If you win your case, you will usually have nothing to pay to the other side.
  • You will have to pay a fee to your solicitor. The amount you pay will be a proportion of the damages (compensation award) you receive from winning the claim.
  • Your solicitor will explain the terms of the fee agreement to you before you agree to sign it. If you decide to use Mooneerams to handle your claim, the exact percentage will  be discussed and agreed upon before you sign the agreement.

Is there a hidden catch with No Win No Fee, then?

No Win No Fee agreements were not invented to try to ‘catch clients out’; precisely the opposite. The way these agreements work is relatively straightforward. Some people may be suspicious of them, because they are so straightforward.

When the Access to Justice Act 1999 came into force in 2000, and abolished legal aid in personal injury claims, No Win No Fee Agreements filled the vacuum. They ensure ordinary people can still get legal advice and assistance to fulfil their need for access to justice.

‘No Win No Fee agreements’ do what their name suggests; they prevent claimants from facing huge legal bills if they lose a case.

Why do some people complain about being hit with hidden or unexpected fees under a No Win No Fee Agreement?

Problems arise when a client fails to fully understand the terms of the No Win No Fee agreements, probably  because it hasn’t been properly explained to them. In practice, many fee agreements are lengthy documents and can be hard to understand.

It is your solicitor’s job to explain the No Win No Fee agreement to you in clear terms, not using complicated legal jargon. If a dispute over legal fees arises between solicitor and client after the agreement’s been signed and the claim was successful, it is usually because:

  1. The amount of the solicitor’s fee deducted from the compensation awarded, is higher than the client expected.
  2. An After the Event (ATE) insurance premium has been taken out of the client’s compensation, and the client knew nothing about this possible deduction when entering into the fee arrangement. Or perhaps the client knew a premium would be applied but did not expect the amount to be as high as it was.
  3. Barrister’s (or Counsel) fees have been incurred, with the fees taken from the client’s compensation. Barrister’s charges can be expensive. The fee agreement should include a relevant clause confirming barristers’ fees are to be deducted as a specific item, if that is going to be the case.
  4. The onus is on the solicitor explaining the fee agreement’s terms to ensure the client understands them before signing. It is also vital that clients do not sign agreements until they feel fully understand the main points.

It is better to ask the solicitor to explain something several times before you sign an agreement than to get into a dispute over fees you did not expect to pay.

Deduction of an ‘After the Event’ insurance premium from your compensation

When you instruct personal injury solicitors to pursue a claim, they may ask you to take out an After the Event (ATE) insurance policy at the same time that you enter into the No Win No Fee agreement.

The purpose of an ATE policy is to cover you financially should you lose the claim. If you lose the case, the insurance will pay the other side’s legal fees.

If you win the case, you will have to pay the cost of the insurance premium. This sum will be in addition to the fee you have agreed to pay your solicitor for winning the claim.

The solicitor cannot deduct the premium from your compensation unless the terms of the No Win No Fee agreement specifically provide for this. These premiums can amount to hundreds of pounds.

It is essential you know beforehand:

  • whether a policy is going to be taken out on your behalf,
  • how much the insurance premium will be, and
  • whether, in the event of you winning the case, a separate charge for this will be taken from your compensation.

Many experienced personal injury solicitors will decide not to take out an ATE policy for their No Win No Fee clients at the start of every case. Instead, they back their judgement that you have a winnable case without resorting to the use of expensive insurance.

Remember that a solicitor who takes on a No Win No Fee case will only get paid if they win the case for you. In the meantime, they will have paid fees up front for experts reports, police reports, medical records, and court fees. They would not do this unless they thought that on the balance of probabilities your case would be successful.

As long as the fee agreement contains a provision that if you lose your case, you have no legal costs to pay, you will have no financial risk.

 

Conclusion: Getting the compensation you deserve

No Win No Fee personal injury claims have become commonplace since legal aid was abolished. In most cases, they work well and to the satisfaction of both client and solicitor.

When disagreements occur between a client and their No Win No Fee lawyer, it is usually because the legal advisor has failed to properly explain the terms of the No Win No Fee agreement.

Solicitors should provide clients with a clear explanation of how the No Win No Fee Agreement works so that when their clients sign the agreement, they are providing their informed consent to any deductions taken from their compensation.

Mooneerams are experienced Cardiff based No Win No Fee solicitors. To find out more about how we can help you make a No Win No Fee personal injury claim, call us on 029 2048 3615. You can also contact us online, requesting a call back.

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