Is No Win No Fee Really What It Seems?
No Win No Fee is a term that is often mentioned, but what does it actually mean?
Why Does No Win, No Fee Exist?
The Government decided to scrap legal aid for personal injury victims but knew that this could cause uproar if they did not replace it with some other form of scheme that would still allow people to make claims for compensation without having to pay the solicitors fees on their own. What used to happen with legal aid is that the Legal Aid Board would pay the solicitor for his time as the case progressed (and bear in mind they often take two to three years to complete) and then at the conclusion of the claim the solicitor would claim back his total bill from the insurance company of the other party. This might have been the insurance company for a car driver or for an employer if the accident happened at work. So in effect the Legal Aid Board was really only providing temporary payment (or a loan) for the solicitors costs.
As the vast majority of personal injury claims are quite easy to assess at the beginning of a claim the solicitor would know that in most cases the claim would be successful, meaning the insurance company would pay his costs. Whilst legal aid was in place, this was the method of providing temporary funding for the claim. With the removal of legal aid for accident claims, the government wanted to come up with a scheme that allowed claims to proceed without the victim or the legal aid board picking up the bill. The result was the No Win No Fee Agreement.
How does A No Win, No Fee Agreement Work?
When you make a claim with a No Win No Fee Agreement (also known as a Conditional Fee Agreeement) you can claim compensation for an accident. By entering into one of these agreements you are able to make a claim for personal injury compensation. However, the Solicitors costs still need to be covered. The agreement covers this by stating that the solicitor will only recover his costs if the claim is ultimately successful. Whilst the claim is being pursued the solicitor cannot charge you for his services, in effect he is sharing the risk to make a claim with you. If you do not win your claim your solicitor will be paid nothing at all for all of the time he has spent pursuing your claim for you. This is the essence of the No Win, No Fee Agreement.
What Happens If You Are Successful In Your Claim For Compensation?
If your solicitor wins your claim for you, then not only can he claim his normal costs back, but he is also rewarded with an additional payment called a "success fee". The success fee is also paid by the insurance company and so should not come out of your compensation, and many solicitors will agree to this.
No Win, No Fee, No Catch?
You should be able to see so far how the agreement works in practice. However, what we have not covered is the position if you win your claim. Do all No Win No Fee agreements mean the same thing? In short the answer is no. Some solicitors or claims companies might decide to charge an administration fee to you for acting for you, and this will often be paid from your compensation. Each company is different, so the moral of the story is that you really must read the small print when choosing your No Win, No Fee Solicitor or Claims Company. They are not all the same and you do not want to find out when it is too late that you must pay over some of your compensation at the end of the claim.
Now that you know how the system works you should be able to ensure you are not caught out in this way.
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Nick Jervis is a marketing consultant to Carter and Carter Solicitors.
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