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Litigation Funding: No win – No fee

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No win – no fee. What does it really mean?

Before you read any further there is one simple consideration:  claims under £10,000.00 typically fall within the Small Claims Track of the County Court and therefore costs would not be recoverable in any event.

What is a ‘no win no fee’ arrangement?

This is a Conditional Fee Agreement (“CFA”) with your legal team to assist you with funding your litigation.

The purpose of the CFA is to have a separate funding arrangement in place so that instead of paying your Solicitor’s legal fees as you go, these are deferred and only become payable at a later date if you win your claim.

Should you lose your claim you will not need to pay your legal team’s fees. However, there is a still a financial risk in respect of your opponent’s costs and other costs as your case progresses.

Q. If a Solicitors Practice states it offers CFA’s do they have to take on my case?

No.

Whilst a solicitor’s practice may be willing to fund cases on a CFA arrangement, it is solely at the firm’s discretion, down to their assessment of the risk in non-payment and whether they are prepared to take it on.

It is rare that our litigation department will be able to run cases on a CFA basis where the value is less than £100,000 unless there are exceptional circumstances.

Q. What is a win?

A win is considered to be anything that is retrieved from the Defendant as a result of the action that is taken against them. This can be by way of an agreement with the Defendant or Court Order.

Q. What happens if I win?

In accordance with the terms of the CFA should you win anything your Solicitor’s fees will be triggered.

The Solicitor will seek to recover its normal fees from the Defendant. However, your solicitor cannot seek to recover any uplift by way of a success fee from the Defendant. Therefore, you will be required to pay the success fee to your solicitor.

Q. What is a success fee?

A success fee is an uplift percentage on the Solicitor’s chargeable time that has been incurred up to the date you are successful. The reason for the uplift is that your legal team has invested time and resources in pursuing your litigation and undertaking work with the risk that it may not recover anything in the event you are unsuccessful.

Please note that a success fee can be from 25% up to 100% of your Solicitor’s normal chargeable time in progressing matters for you.

Q. Will I have to pay the other side’s costs?

Should you issue proceedings and be unsuccessful then costs generally follow the event. This means that the Defendant would be also able to seek an award for costs against you in the event you are unsuccessful.

As a general rule of thumb costs awarded can be anything up to 70% of the actual fees incurred. Further, the costs are likely to be in line with your own legal team’s costs having gone through the same litigation with you.

Q. What if I can’t pay the Defendant’s costs?

When taking out a CFA, we would always recommend that you have effective after-the-event insurance (“ATE”) in place to safeguard you against any cost awards in the event you are unsuccessful.

Q. What is ATE insurance?

At the outset of your claim, an ATE provider will assess the likely prospects of success and the merits of your case when considering any offer it is willing to make in respect of funding your litigation risk. The amount the ATE is willing to underwrite in respect of your case will be confirmed at the outset, together with the premium that you will have to pay for the policy in the event you are successful with your claim.

Q. Do I have to pay the ATE’s premium at the outset?

No.

The ATE provider’s insurance premium will only be triggered if you win and ordinarily will be based on a percentage if not a fixed amount.

If you do not win and are required to pay costs to the Defendant the ATE provider will make a payment on your behalf up to the indemnity limit agreed.

Q. Are all cases suitable for a CFA?

No.

An initial assessment of the merits and likely prospects of cost recovery would need to be considered, the amount or your claim, together with the means of the Defendant concerned. This will provide an early indication of whether a CFA arrangement would be suitable and work for you. It will also enable a Solicitor’s Practice to consider and confirm if it is prepared to invest in your litigation and take the risk that it may not be paid.

As said at the start of this guide, claims under £10,000.00 typically fall within the Small Claims Track of the County Court and costs would not be recoverable.

Further, should you need any award to rectify any damage then a CFA arrangement is unlikely to work for you, even if the values would make it a viable option otherwise. As should you succeed you would have to pay the success fee and the premium out of any amount awarded to you or fund this separately.

If the Defendant is insolvent, or of limited means and is not insurance backed your case would not be suitable for a CFA arrangement to a Solicitor’s Practice or an ATE provider as it is likely to result in enforcement issues when seeking to recover any amount awarded to you.

As a result, not all cases would be suitable for a CFA arrangement or an attractive proposition for a Solicitor’s Practice or ATE provider to assist you with. Each case will need to be assessed on its own merits. Therefore, when looking to fund litigation in this way there are additional formalities and due diligence requirements at the outset and prior to any confirmation and agreement to fund any litigation on a CFA arrangement.

Q. If I have a CFA arrangement will I still be required to fund disbursements?

Yes.

Any third expenses (“disbursements”) would not be met by your Solicitor. Whilst it is investigating its own time and resources, it would not be required to pay your expenses and disbursements on top.

You will be required to pay any Court fees and any other third-party disbursements and expenses unless a separate disbursement funding arrangement exists or you choose to finance the disbursements by alternative means.

Q. Are all cases suitable for a CFA?

No.

It is not a case of one size fits all. There are a number of variables that need to be taken into account. Your case has to be a viable and attractive option for everybody involved and would also have to work in practice.

Certain cases would ordinarily be more suited to a CFA arrangement. There would also have to be strong prospects of success and the ability to recover your costs from the Defendant to make such an option viable.

No matter what type of claim you are pursuing, chances are we have funding options to suit.

Funding options are numerous and can be quite complex, but here at Wilson Browne, we like to keep things simple.

Investigating a claim is expensive, sometimes costing thousands of pounds. We can help with cash flow concerns and will work with you on a solution that will often see us standing shoulder-to-shoulder with you, carrying some of the risk. There are a number of ways that we can help:

  • Legal Expenses Insurance –  You should check your insurance policies to see if they include legal expenses cover.
  • No Win, No Fee agreements –  Technically called “conditional fee agreements” they mean that you do not have to pay the cost of your solicitor if you lose your case. If you win, then you may have to pay something out of the money we recover. This is as a result of changes brought in by the Government on 1st April 2013. We are proud to hold delegated authority from Temple Legal Protection Limited to make sure that cases on a no-win-no-fee are fully insured. Where we can work for you on this basis, we will. Find out more about how we work with Temple Legal Protection here.
  • Trade Union help – if you are an individual member of a trade union, they may be in a position to help.
  • Public Funding – legal aid is no longer available for commercial or professional negligence cases.

These are just some examples of how we can help individuals and businesses to fund their claims but it’s not an exhaustive list so if you don’t see what you need, just ask – we’re here to help.

Thank you…for all your help and support…It was not until you brought the ‘no win no fee’ suggestion in to play and the very real possibility that the case could end up in court that we started to make headway. The ‘happy ever after’ ending following mediation was the icing on the cake.

We can discuss instalment options, fixed price litigation or annual retainers – just give us a call on 0800 088 6004, and we’ll go from there.