No Win No Fee Explained

Conditional Fee Agreement (CFA)

The formal name for a no win no fee arrangement. A contract in which your solicitor takes on the financial risk of the claim, and is paid only if it succeeds.

The formal name is a Conditional Fee Agreement, or CFA. It is a contract in which your solicitor agrees to take on the financial risk of the claim. They are paid if the claim succeeds and not paid if it fails, which is why they will assess the merits carefully before taking it on.

That assessment is worth understanding rather than resenting. A firm turning a case down under a CFA is telling you something useful about its prospects, because they only earn if you win.

Winning does not mean paying nothing. It means paying out of the compensation rather than out of your own pocket, and the deductions are limited:

• Your solicitor's basic costs are largely recovered from the defendant's insurers, not from you.
• The success fee comes out of your damages. It is capped at 25% of your general damages and past financial losses.
• An after-the-event insurance premium, where one has been taken out, is usually deducted from the award.
• Some disbursements — medical report fees, court fees, expert reports — may be deducted if they are not recovered from the other side.

Ask for an illustration in pounds before you sign, not just percentages. A reputable firm will give you one.

Under the Conditional Fee Agreements Order 2013, the success fee in a personal injury claim cannot exceed 25% of general damages and past financial losses. Two details matter, and they are routinely glossed over:

• It is a cap, not a rate. 25% is the maximum, not the standard. A lower percentage can be agreed, and it is a fair thing to ask about.
• It excludes future losses. The success fee cannot be charged against damages for future loss of earnings or future care. In a serious injury claim those can be the largest part of the award, and they are protected.

So "25% of your compensation" is not quite right. It is 25% of a defined part of it. How the award breaks down is explained in the compensation guide.

Two things, and most people only know about one of them.

The first is the CFA itself: lose, and you owe your solicitor nothing for their time. The second, and arguably more important, is qualified one-way costs shifting — a rule specific to personal injury claims under which an unsuccessful claimant is generally protected from having to pay the defendant's legal costs. Without it, losing a claim against a large retailer's insurer could be financially ruinous.

After-the-event insurance sits behind both, covering the situations where that protection does not apply and any disbursements already incurred. It is normally arranged with no premium payable unless you win.

This is the part the phrase "risk-free" papers over. The protections above are strong but they are conditional, and they can be lost:

• Fundamental dishonesty. Exaggerating an injury or inventing losses does not merely reduce a claim — it can see the whole claim dismissed and the costs protection removed. This is the single most serious risk, and it is entirely within your control.
• Breaching the agreement. Giving your solicitor misleading information, failing to attend medical appointments, or not cooperating can allow the firm to end the CFA and charge for work already done.
• Abandoning the claim against advice. Walking away from a case your solicitor believes is winnable can trigger a costs liability under the termination clause.
• Turning down a formal offer and doing worse at trial. If the defendant makes a formal settlement offer, you reject it, and the court awards you no more than the offer, you can become liable for the costs incurred after it was made.

Read plainly: behave honestly, engage with the process and take the advice you are paying for, and none of these arise. But "risk-free" is not the same as "unconditional", and you should know which one you are being offered.

A CFA is a contract. Five things are worth reading properly before signing:

1. The success fee percentage, and confirmation of what it is charged against.
2. The termination clause — what happens if either side ends the agreement early.
3. Whether after-the-event insurance is being arranged, and who pays the premium.
4. Which disbursements you could be liable for, and in what circumstances.
5. An illustration in pounds of what you would receive on a realistic settlement.

A firm that will not put those in writing is telling you something. One that will is the one to instruct.

What are the dangers of no win no fee?

The main risks are not in the funding itself but in the small print. You can become liable for costs if you break the terms of the agreement — by giving your solicitor misleading information, failing to cooperate, or abandoning the claim against advice. A finding of fundamental dishonesty removes your costs protection entirely and will see the claim dismissed. Rejecting a defendant's formal offer and then failing to beat it at trial also carries costs consequences. Behave honestly and follow your solicitor's advice and none of these arise.

How much do solicitors charge for no win no fee?

If you win, most of your solicitor's basic costs are recovered from the defendant's insurers rather than from you. What comes out of your compensation is the success fee, which is capped by law at 25% of your general damages and past financial losses — not 25% of the whole award, and never taken from compensation for future losses. Any after-the-event insurance premium and some disbursements may also be deducted. If you lose, you pay your solicitor nothing.

Will I have to pay the other side's costs if I lose?

Usually no. Personal injury claims are covered by qualified one-way costs shifting, which means a losing claimant is generally protected from paying the defendant's costs. That protection can be lost if the claim is found to be fundamentally dishonest or is struck out. After-the-event insurance is normally arranged to cover the situations where the protection does not apply.

Is the success fee really capped at 25%?

Yes, for personal injury claims. Under the Conditional Fee Agreements Order 2013 the success fee cannot exceed 25% of general damages and past financial losses. Two points matter: it is a cap rather than a fixed rate, so a lower percentage can be agreed, and it cannot be charged against damages awarded for future losses such as future loss of earnings or future care.

What happens if I want to change solicitor part-way through?

You can, but it may not be free. Ending a conditional fee agreement early can trigger a liability for the work already done, depending on the terms you signed. Check the termination clause in the agreement before making a decision, and raise your concerns with the firm first — most issues are about communication rather than the merits of the claim.