More Information on "No Win No Fee"
“No Win No Fee”
Twenty years ago if you made a claim “No Win No Fee” did not exist. Clients had to pay for their solicitor’s costs, barristers costs and expert fees all up front. At the end of the claim the client would claim their costs back from the third party via a process called taxation with clients usually recovering only 70% to 80% of what their claim had cost them to run. Most clients were either funded by their unions or entitled to legal aid. Ordinary people without help with funding rarely made claims as it was too high a risk and cost too much money.
In 2000 legal aid was abolished for personal injury claims and the government introduced “No Win No Fee”. Clients would no longer have to pay for their solicitors as their claims progressed rather, solicitors would bankroll the claim. It cost a lot of money to bankroll a claim so solicitors were allowed to start charging a success fee by way of a method to recover this invisible cost. The success fee had to be paid for by the third party insurance company and not the client. So the amount of claims grew rapidly as the consumer wised up to a “no risk no cost” claims market.
This high point in the claims market place lasted between 2000 and April 2013. During this period, the insurance companies started a campaign to persuade government to change the system to again make clients responsible to pay something as they had done before “No Win No Fee” was introduced.
The insurance industry was successful and in April 2013 the Jackson reforms comprehensively changed the way “No Win No Fee” works. Clients can still ask a solicitor to fund/bankroll their claim but as success fees were abolished, clients now have to pay something for that facility at the end of the claim and thus contribute towards their own legal costs. The charge is capped at 25% of the value of the claim for injuries and does not apply to lost wages or expenses generally.
Clients had understandably become used to not paying or contributing anything when making a claim. As charges proved unpopular claims management companies and some solicitors tried to hide the bad news behind complicated charging structures where clients apparently pay no contribution towards costs, only to discover at the end of their claim charges were made but that they are dressed up as something else.
Charging is here to stay. The government’s own press releases make it clear that solicitors will go out of business if they don’t charge their clients. We take the view that a simple and transparent charging structure designed to operate as the law intended is better for our clients than complex arrangements where clients are ambushed at the end of their claim with hidden charges.
Finally there are some exceptions to these rules and this applies to catastrophic injury claims that run for 5 years or more. If your claim falls into this category, you will be given separate advice about the operation of “No Win No Fee”.