The nature of no-win-no-fee
With constant criticisms of the
no-win-no-fee system prevalent in almost every news story associated with the scheme, this article aims to underline and explain the essential features and benefits that were originally aimed to help people gain easier access to justice. Despite accusations of the scheme being used for purposes for which it was not created, various incidental features of it were introduced for a good reason and still help many clients in the UK.
No-win-no-fee arrangements are also commonly known as Conditional Fee Agreements. In the majority of cases where such an agreement is involved the agreement is a true "no win no fee" agreement, in that the client does not have to pay the lawyers if the case is lost. At the first stage then, the client makes an written agreement with counsel called a Conditional Fee Agreement.
The nature of the arrangement can be altered somewhat in the event of a more legally complex case. Complexity often translates into risk and to offset this, the client may have to pay a "cushion" fee if the case is lost. This is an amount agreed beforehand with the lawyer and is commensurate the risks of the case.
Assuming that a case was successful for the client then they will pay their lawyer the base fee which is essentially his normal rate. On top of this, a figure is added on to reflect the risk the lawyers took upon themselves when first agreeing to the arrangement in question with the client. This figure is appropriately called the ‘success fee’. Each case will have to be assessed for its merits and the success fee agreed accordingly. If a lawyer takes on a case which has various weaknesses (and so more risk) the success fee will be higher, because the lawyer is taking a greater risk that he will not be paid anything.
If things take a more negative turn and the case is lost, the client can be covered for counsel’s fees by being part of an ‘after the event’ legal expenses policy. With regard to the client and his liability for the other side’s costs, the client may be indemnified for the risks of having to pay the other side’s costs. Such policies are offered by insurance companies. The amount of the premium represents the risks involved in the case and the likely amount of such costs. Soon the premium will be recoverable from the other side if a costs order is made against them.
Updated on 6/11/2008