Conditional Fee Agreements (also known as “No-win, No fee agreements”)
Many solicitors offer Conditional Fee Agreements, and we are no exception. However, before entering into an agreement of this type, it is important to understand it fully. For many people, there is a misconception that you will never be responsible for any fees.
The following is a brief summary of the costs that you need to be aware of:
- The term “no-win, no-fee” only usually relates to your own solicitor’s costs so that, if you lose your case, you pay no fee to your solicitor for the time that he/she has spent on your case.
- The agreement does not usually cover the cost of disbursements (i.e. costs paid out by your solicitor on your behalf such as the cost of obtaining a police report, medical records, and instructing an expert to assess your injuries).
- The agreement does not cover the Defendant’s costs. If you are unable to prove that your opponent was at fault, you will not usually be liable for their costs. However, there are some exceptions to this, the most notable being a finding fundamental dishonesty on your part.
- If you are successful in proving your opponent was at fault, they may make an offer. If you refuse the offer and later fail to better their offer, you will be liable for the defendant’s costs and possibly also your own solicitor’s costs and disbursements from the date of expiry of the Defendant’s offer (usually 21 days).
- Your solicitor can arrange a policy of insurance if you did not have legal expenses insurance in place at the date of the accident. This is often referred to as “after-the-event” or “ATE” insurance policy. You can buy insurance to cover your own disbursements and the defendant’s costs and disbursements. The cost of the policy (called the “premium”) is, however, payable by you whether you win or lose your claim (except for clinical negligence claims where some of the premium may be payable by the Defendant).
- If you win your claim, then, under of the terms non-win, no-fee agreement, you are responsible for paying your solicitor’s costs (ie the opposite of “no-win, no-fee” is “win, fee”). As the winning party, you are entitled to claim your legal costs from the Defendant (the losing party). You should be aware, however, that the Defendant is not duty bound to pay for all of the work your solicitor does on your behalf and, in addition to this, the Defendant will often seek to argue down the cost of the bill presented to him by your solicitor. The terms of the conditional fee agreement may hold you responsible for any shortfall.
- A success Fee might be applied by your solicitor. This is an additional payment, on top of the basic charges. It only applies if you win your case. It is usually charged as a percentage of the basic charges. The percentage can be set at anything up to 100% of those charges and your solicitor will decide on the right percentage based upon the complexity of your case and the risk that he/she is taking in pursuing your claim for you. The success fee, however, must be capped by law at no more than 25% of the damages you receive for pain and suffering and any past losses (i.e. not including any future losses that you recover).
Legal Expenses Insurance (also known as “Before-the-Event” or “BTE” insurance)
Whilst you may not have taken out specific insurance, many insurance companies throw this in as an additional extra. It is important to check to see if this exists. If it does, you may be entitled to free legal advice from a solicitor assigned to a Panel of solicitors selected by the insurance company, and the cost of any disbursements, plus the Defendant’s costs may also be covered. This sounds simple enough, but again there are some things to be aware of when considering whether to use this service:
- You will normally only be able to use the solicitor chosen for you by the insurance company (at least until it is time for you to issue proceedings at Court, at which point you are entitled to choose your own solicitor).
- The Policy will normally only cover your legal fees up to a certain limit. Once this limit has been reached, the solicitor will usually enter into a “no-win, no-fee” agreement with you, and invite you to purchase a policy of insurance to cover the additional costs incurred by others if you lose (described above). For small claims, the policy of insurance should be enough to cover the whole of your claim. In larger, more complex cases, however, this will rarely be the case.
Your solicitor should always discuss the above matters with you, to ensure that you consider all of the options available to you before choosing the best option for your particular case.