What does ‘No Win No Fee’ really mean when making a claim?

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No Win No Fee is a common way of making a claim for personal injury compensation without the claimant risking extremely expensive legal fees. However, there are important key facts potential claimants should understand and consider regarding this method of funding legal action before they instruct a No Win No Fee Solicitor to act for them.

Table of contents:

What is a No Win No Fee claim?

The option of being able to pursue a legal action on a No Win No Fee basis is an important and vital legal right that affords people the opportunity to seek justice and redress from a 3rd party, without risk to their own finances. Without No Win No Fee options, a claimant would have to have personal wealth to be able to pursue their claim.

A No Win No Fee agreement (officially known as a Conditional Fee Agreement or CFA) enables a Solicitor to pursue a claim on the basis that they will charge no fee to the claimant if they fail to succeed with the claim. If successful, it allows the Solicitor to recover the majority of the claimant’s legal fees from the defendant and deduct a small percentage from the claimant’s settlement to cover the remaining fees.

A Solicitor will evaluate the strengths and weaknesses of a claim at the outset before they then decide if the prospect of success outweighs the prospect of failure. If a Solicitor is of the view that the claim has a realistic prospect of succeeding, they may offer to pursue the matter for the claimant on a Conditional Fee Agreement (No Win No Fee) basis.

A claimant will pay nothing if their claim is unsuccessful so long as they have not acted fraudulently and have cooperated fully with their Solicitor during the pursuit of the claim.

What do I pay if I win my No Win No Fee claim?

 

If a Solicitor succeeds with a No Win No Fee claim for their client, they will ensure that the full extent of any injury (and the long term consequences of the injury) are fully understood and that the maximum amount of compensation will be negotiated for the injury. Also, the Solicitor will ensure that all lost income and incurred costs that can be attributed to the injury are recovered. This will form the total settlement of the claim and the value will be agreed between the Solicitor and claimant and then negotiated with the defendants.

When settlement is agreed and the balance forwarded to the claimant, the Solicitor will – as per the terms of the Conditional Fee Agreement (no win no fee) signed at the outset, deduct up to 25% of the awarded compensation. This deduction goes towards the Solicitors legal fees, with further costs chargeable to the defendant. The only other cost that a claimant may face on success of their claim is for any provided After the Event (ATE) insurance cover that the Solicitor had to put in place at the outset of the claim. The law prohibits successful claimants from recovering the cost of ATE cover from the defendants on success of a claim. If such cover is needed, the cost is typically between £150 & £250 but this can vary. Again, it is only payable if and when a claim succeeds and never payable if a claim fails.

If a claimant has pre-existing Legal Expenses Insurance (LEI) cover in place, a Solicitor will attempt to use that, meaning that there will be no further cost when succeeding with a claim.

What do I pay if I lose my No Win No Fee claim?

Whilst any claim that is pursued is taken on with the genuine hope of succeeding, there is always a possibility that the claim will fail. It may be that the defendants are able to mount a robust defence at the outset and demonstrate that the claim will not succeed, or it could be that the claim end in a court hearing and a judge decides that it is not reasonable to hold the defendant liable.

Whilst the failure of any claim is extremely disappointing for the claimant, the claimant will not face any costs whatsoever in such circumstances, so long as the information they have provided to their Solicitor was honest and they have cooperated fully with their Solicitor during the process of the claim.

The claimant will not pay their own Solicitor’s costs, or those of the defendants, as the liability for such costs will be met by the Solicitor by way of the claimant’s pre-existing LEI cover or by way of ATE  insurance cover put in place by the Solicitor. It is important to note that the claimant will NOT pay for any ATE cover if their claim is not successful.

Can I ever be charged if my claim fails?

If you, as a claimant, have acted honestly, cooperated with your Solicitor fully (answered questions, attended medical assessments, responded to queries etc) you will never pay a penny to any person should the claim eventually fail for reasons beyond your control.

However, claimants must be aware that a Solicitor does withhold the right to recover costs if it is found that a claimant has acted fraudulently and caused the Solicitor to incur costs in their efforts to pursue a claim that is found to be dishonest or incorrect. Also, if a claim were to fail because a claimant failed to cooperate with their Solicitor, return signed authorities within an agreed deadline, failed to attend a medical assessment or court hearing, a Solicitor is within their rights to pursue that claimant for their costs as they can not recover their costs from a defendant if the claim fails due to the fault of the claimant.

Finally, a claimant may be pursued for costs if they decide to withdraw from their claim before it is settled. The reason for this is that their Solicitor will have incurred costs – both from the hours of work that they would have conducted on the claim and also disbursements (medical records requests, medical expert instructions etc) – and they will no longer be able to recover them from the defendants.

Claimants who are worried about pursuing their claim should always speak with us or their Solicitors before they decide to withdraw from the process. We are humans and we care. We understand that people may have anxiety about taking legal action and we’re here to help make sure that you have the confidence to pursue the matter fully.

Cancelling a No Win No Fee agreement

Whilst it is rare for a claimant to cancel their claim, all claimants have the right to terminate their No Win No Fee agreement with a Solicitor that has been instructed. All claimants will be made aware of this at the signing of their agreement with their chosen Solicitor. Any claim cancelled within the first 14 days is within a cooling off period and no fees would be payable to the Solicitor. However, claimants are reminded that they should be aware that they may be required to pay fees to their Solicitor should they choose to cancel their instruction to their Solicitor after the 14 day period, as the Solicitor will be unable to recover the costs for the work that they have undertaken.

Who pays Direct2Compensation?

The claimant will never pay a penny to Direct2Compensation, win or lose. We are not funded by the claimant. The specialist personal injury Solicitor firms who form our specialist partner panel pay us. Their payments are not based on a volume of claims or on success or failure meaning that we have no motivation for attempting to pursue low quality claims or to pressurise claimants in to taking action. Our specialist Solicitors have a proven track record of success and our clients give excellent feedback as to the quality of service provided by them.

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Comments & Questions

Read on for questions and advice about claiming...

So if the new solicitor hasn’t preserved their lien then what happens?

After all it was a no win no fee contract and the Solicitors wouldn’t have won anything with the claim – the new solicitor would have?!

Also, why would a Defendant try to find you dishonest but offer you £100k to stop court action?

Ian Morris

It is a frustrating situation that sees an often rubbish previous Solicitor able to recoup their costs despite being useless when a client switches to a decent new Solicitor? who then succeeds with their claim. Indeed, the fact that a previous Solicitor can retain entitlement to costs often prevents a new Solicitor from taking over a claim because it becomes financially unviable for them to do so. We experience this quite a lot with people approaching us for help when they’ve been badly let down by the often well known TV advertising firms or Solicitors who are on to a winner by being on insurers or union panels and get fed loads of work. Those Solicitors often provide a terrible service, with unqualified people handling claims (overseen by qualified Solicitors at arms length of course) because they get such a high volume of work handed to them – why would they care about claimants in the way that smaller, more bespoke and caring firms like ours and our Solicitors would? Sadly, switching Solicitors during a claim is far from straightforward (in fact, it’s very hard). The lien costs issue is another reason that makes the importance of carefully choosing the right specialist Solicitor at the outset of a claim even more vital.

To answer your final point, the defendants have obviously tried to discredit you in a bid to avoid settling your claim. The fact that they’ve offered such a high amount to get you to settle without going to court indicates that they don’t believe that they can win this matter should you proceed to take it to a court trial.

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Do I still have to pay if a Solicitor quits before the claim has ended?

Ian Morris

If a Solicitor were to withdraw from a claim and you then went on without representation to settle the claim, you would not have to give the Solicitor a penny. However, if a new Solicitor takes over the running of a claim from a previous Solicitor, the previous Solicitor may preserve a right to recover their lien costs from the new Solicitor – when the new Solicitor receives settlement from the defendants.

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Do you cover accidents at work?

Ian Morris

We cover all types of personal injury compensation claims, but accidents at work and claims arising from workplace accidents are something we have a specific speciality and expertise in. Please call us on 01225430285 to discuss your situation and find out how we can help you. Alternatively, you can use our website to start your claim for compensation.

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What is LEI? My partner is going through a no win no fee claim at the moment. The acting solicitor has requested all our insurance document even my car insurance . I’m concerned that if he does not succeed they will claim against our insurance which will have a huge impact on future insurance

Ian Morris

LEI is ‘Legal Expenses Insurance’ (and also known as BTE – ‘Before the Event’) and is often an add on that is included with various insurance policies, financial products or memberships of certain societies or bodies.

Your Partner’s Solicitor is acting correcting in ascertaining what, if any legal expenses insurance your Partner has in place that may prove to be helpful in the pursuit of their claim. If a claimant has no LEI/BTE insurance in place, a Solicitor may recommend that an ‘After the Event’ insurance (ATE) policy is purchased to help with the claim. The claimant wouldn’t pay for the insurance if they lost their claim, but would cover the premium from their settlement if they succeeded. In most cases, ATE is not needed or recommended, but if a claimant has LEI or BET in place, it can enable a Solicitor to take more risks with a claim – especially if it is proving difficult to get the defendant to make a sensible settlement offer. Generally speaking, our Solicitors no longer recommend such policies.

Please rest assured that using any existing LEI/BTE insurance has no impact on renewal premiums and is not seen as a claim on your motor insurance or home insurance etc – these policies are there to be used when legal help is needed – whether that be a personal injury claim as in this case, or if you had a dispute with a contractor, neighbour or some other sort of need for legal services.

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Hi I was in a RTA as a passenger the driver admitted liability my solicitor is charging 25% plus vat I thought on personal injury there was not charged vat also I was told to take out ATE insurance wich I was told it would be £350 now solicitors are charging £473 so when a offer was made it worked out the solicitors were taken half of my offer can you please tell me can the solicitor do this when there’s legalisation put in place thankyou .

Ian Morris

If the Solicitor is VAT registered, they can add VAT. Many Solicitors opt to include any VAT within their deducted 25% but some do add the VAT to the 25% deduction. As for the ATE premium fee, the Solicitor should not deduct any more from your settlement for that than they had expressly stated that they would – and to which you signed at the outset of the claim.

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I just wanted to ask whether with a no win no fee claim, if u win your case is the 25% (and any insurance premium) taken from your winnings or do the other side pay your fees?

I met a lady who said that she went with a no win no fee provider and when she won her case (which didn’t go to court), the people she was suing were the ones who paid her 25% and nothing came out of her winnings as it was recovered from the other side. Is that correct?

Ian Morris

Sadly, the person with whom you were speaking is incorrect – unless their claim was for an accident that happened before the personal injury reforms came in to effect on 1st April 2013. Before these changes, claimants could retain 100% of their compensation and recover all of their costs from the defendants. Unfortunately now, claimants cannot recover all of their costs from the defendants and they cannot recover ATE insurance premium costs either. Therefore, a claimant will have to contribute from their settlement should they succeed.

Our No Win No Fee service guarantees that a claimant will NEVER contribute any more than 25% towards their costs and our Solicitors will not recommend that a claimant takes ATE insurance except in very rare cases where the benefits of doing so are obvious and worthwhile. Some companies do continue to recommend often expensive ATE policies. Whilst the claimants would never pay anything if they are not successful with their claims, some claimants end up contributing far more than 25% of their settlement towards costs if they don’t choose the right specialist provider (like us!) to act for them.

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Hi,
I had an on-going personal injury claim for an RTA, however due to a family grievance and other commitments I had to pull out. This was 2016-2019. I paid the solicitor fees. However, the solicitor had recommended a repairer ‘accident xchange’ who repaired my vehicle. I was under the impression as I paid my conditional fees, it would be upto the solicitor to deal with the bill either via the third party insurer or my insurance however accident xchange have sent me an email advising I am liable for the £21000+.
Could you advice who is liable as it was the solicitor who advised me to go with this company for repairs and I was fully insured?

Thank you.

Ian Morris

The costs of the vehicle repair should rest with whichever party was liable for the road traffic accident itself. Whether or not you pursue a personal injury claim should be irrelevant but you should inform your then insurers of this bill and request that they deal with this for you.

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I am currently pursuing a claim for an RTA under no win no fee, it’s being going on for nearly 14 months now still not resolved, even though 4 independent medical professionals have concluded it was whiplash injury caused at low speed 5-10mph. Third party insurers saying the injuries sustained are not consistent with the speed and damage to the vehicle. Third party insurers had until 3rd December to make out of court offer, my nwnf solicitor does not want to pursue court action saying there’s a risk of loosing and I would have to pay Defendants to costs if lost in court, so he’s still pursuing other insurers for settlement. 1. Is that correct saying I would be liable for costs? 2. Am I in my rights to transfer this case to another solicitor to pursue as he seems to be getting nowhere?

Ian Morris

The situation that you find your claim in ‘low velocity impact’ (LVI) is problematic for claimants. Whilst there is no defined evidence to prove that soft tissue injuries such as whiplash cannot be sustained at low speeds, there is also no evidence to prove definitively that such injuries can be sustained. This has opened an escape route for insurers to refuse to compensate for personal injury even when they admit liability for the car accident and vehicle repair costs.

Your Solicitor is correct in that as the defendant has refused to accept liability, taking the matter to court is risky. You would be relying on the Judge finding in your favour and compelling the insurers to compensate you – in which case, they would pay court costs and the majority of your Solicitors cost (less your 25% contribution). However, if the Judge were to find in favour of the defendants – which is sadly a realistic possibility – you would not only obtain compensation, but you would also have to then pay the defendant costs.

Switching to a different Solicitor is unlikely to make any difference to the outcome of your claim and given the nature of the cost burden, a new Solicitor would be very unlikely to wish to take your claim further as it would be financially unviable for them to do so.

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After canceling a claim before the 14 day cool-off period, will my claim still be on the insurance I was going against?

Ian Morris

If you have decided to withdraw from the Conditional Fee Agreement instructions to your Solicitor before the 14-day cooling off period, the claim would not have even started and the insurers would not have been contacted regarding any claim.

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My sister has been fighting a claim against hospital for 12 years. It’s been dragging on and on knowing that she has won her case, but now her own solicitor has gone against her and she wants to sack them.
It was a no win no fee. Would she be liable to pay for the work they’ve done even tho they’ve been crap?

Ian Morris

Whilst your Sister can seek to switch to a new Solicitor, the process is far from easy unless the previous Solicitor has breached the terms of their Conditional Fee Agreement, they will still require payment for their work should the new Solicitor succeed with the claim. This would require the new Solicitor to give an undertaking to the previous Solicitor to meet their costs on settlement. As you can imagine, this may well make it financially unviable for a new Solicitor to get involved (depending on the total value of the claim and total legal costs).

As there appears to be questions about the handling of the claim by the Solicitors appointed, it may well be a good idea to make a formal complaint to the firm in question outlining the areas of concern and why it is felt that they have not acted in the best interests of your Sister – the claimant. If they uphold the complaint, they should resolve matters and ensure that your Sister can settle her claim in a way in which she is happy. If they cannot do so, the complaint can be escalated to the regulatory authorities and legal ombudsman.

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Thank you very much for your reply.
Apologies, as on my second question, I felt that I that I had not explained myself very well. If I may ask again?
Do I have any rights as a claimant to know the total cost of my case?
Many thanks in advance…

Ian Morris

Your Solicitor can provide you with a full breakdown of the costs of your claim – including their costs, disbursements and any other fees. Contact your Solicitor to request the same in writing.

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I have cancelled my no win no fee data breach claim but have been charged two lots of charges one for the solicitors for the work they have done and a separate charge for redemption of the load which was after the 14 day cooling of period is this correct? Should the solicitor fees be included in the CFA charges?

Ian Morris

Much will depend on the terms of the CFA you signed with the Solicitors. How long into the process was your decision to cancel?

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Thank you Ian for your reply. It is very useful.

Ian Morris

You’re welcome!

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How will a claimant know when their Solicitor has obtained compensation on their behalf from the defendant insurer?.

Ian Morris

A Solicitor cannot obtain a compensation settlement without having provided written advice of the offer and obtained a signed authority to accept it. Therefore, if you haven’t yet signed the authority, your Solicitor cannot have the settlement.

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Thank you for your reply, this is very useful information.
I’ve also learned that the 35% success fee they will be claiming is higher than the norm and that even after conducting my own due diligence, it is clear that not all solicitors are the same.

Ian Morris

Solicitors are free to make their own arrangements regarding client costs and potential deductions and it is therefore sensible to make sure that you do not sign up with a firm who charge a higher deduction on success than other firms.

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Yes, there is a CFA in place and I am aware that the ATE policy will only be payable if the case is won. The PAD fee I was unaware of and I haven’t been advised of the exact cost – all I have been sent are some fee waiver/reduction forms, though my salary appears to be way too high to qualify for reduced court fees. The claim will be for an as yet unspecified amount.

Ian Morris

It is certainly not the norm for a client to be required to fund such situations. It would be prudent to ask your Solicitor to put their reasoning for this requirement to you in writing and to request that they confirm that you would be able to recover any such fee should you succeed. Also, I would ask them why they are not able to fund this themselves under the conditional fee agreement you have previously signed.

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Thanks for your speedy reply will discuss with my wife and will let you know, thanks

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My wife is considering no win no fee claim but the solicitors fee is up to 33% is this too high, she has also been told she will have to pay extra fee I.e. shortfall in costs that cannot be recovered from her opponent, does this sound correct. Thanks

Ian Morris

Our Solicitors will deduct no more than 25% of any awarded damages. The only other potential ‘cost’ to a client may be if an ATE policy is needed – although it is rare that such cover is advised these days. If ATE cover is needed, a claimant will not pay the costs of the premium if the claim is unsuccessful, but will have to cover the cost from their settlement alongside a maximum deduction of 25% of the total settlement.

If your wife would like to discuss her potential claim with us, we’d be more than happy to consider the matter and pursue it if viable to do so.

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Hi There.

I am in the midst of a personal injury claim and my solicitors are at the stage of issuing an application for pre-action disclosure, due to non-response from the defendant’s insurers. As well as paying £2000 plus VAT for an ATE insurance policy, I am now informed that I have to pay the court fees for the PAD (which have been described in my Solicitor’s letter as ‘substantial’). Is this standard practice?

Ian Morris

Is your Solicitor acting on a Conditional Fee Agreement basis?

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Hi
I have received and accepted a settlement offer on my personal injury claim after a car accident. In December last year 2020 I was contacted to say they would be sending an interim payment whilst they were still finalising their legal costs. Three months later and numerous emails the solicitors dealing with my claim still say they are awaiting payment and until they do so they cannot send my balance. My question being is this a normal procedure?

Ian Morris

The length of delay in the 3rd party making the interim payment is not normal, although it is common for defendant insurers to be somewhat slow in making payment.

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