How No Win No Fee Works? The Rise Of 'No Win No Fee'
The general premise of a no win no fee claim (officially known as the 'Conditional Fee Arrangement') is that when a claim is made, regardless of its success, the person pursuing the claim never has to pay out any money. This system works by allowing the solicitor to recover their fee from the defendant's insurance cover; therefore no amount is taken from the claimant's compensation to pay for these costs, allowing them to recover 100% of their compensation.
If a claim is unsuccessful, the claimant is technically liable to pay the defendant's costs (known as an 'adverse cost order'). However, the claimant is usually protected against this by having their solicitor purchase an 'After the Event Insurance' or ATE; the cost of this purchase is reclaimed from the defendants if the claim is successful. An alternative to ATE insurance is 'Legal Expenses Insurance' (LEI), which is sometimes referred to as 'Before the Event' Insurance (BTE); this type of insurance is usually already held by the client, perhaps as part of home contents insurance or car insurance, and covers legal expenses as well as costs for pursuing injury claims.
Before the turn of the century, if you were making a personal injury claim, legal aid would available to you. So effectively you were able to find a lawyer who agreed to take on your case, who would in turn apply for legal aid for you so that any legal fees that were accrued, in the case of a loss, would be covered and paid for.
However, this system was seen as limited and not serving of those who needed it most; the requirements of disadvantaged areas of society were not met and it was only offered in certain areas of the law. Additionally, many cases resulted in high legal costs in the case of a win, whereby any compensation won would have to be paid back to the lawyer to cover their fees. As well as this, the legal aid scheme also incurs great costs to the state and public funds, therefore disadvantaging the wider public in the process.
Due to this, shortly after the year 2000 this old system was abolished, leading to the rise in no win no fee claims. The main benefit of this system is that no fees are paid by the claimant if the case is unsuccessful. Conversely if the claim is successful, the lawyer's costs are reclaimed from the defendant's side, meaning that the claimant need never pay any costs. Due to this, the no win no fee system has now become the most popular method of compensation claim, with thousands of claims being made every year.
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