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The real cost of "no win, no fee"

View profile for Robert Weston
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“No win, no fee” sounds like a win-win situation, a good and honest deal – and in certain cases it can be. The implication is that if you lose the case, then you don’t owe anyone anything for trying. If you win, you walk away with the money you were entitled to. At least, that’s how it’s advertised.

There’s a “but”, however, and it’s a pretty big one. And it can mean that some clients end up worse off by winning than they would have been had they lost.

Take the case of Worcestershire businesswoman Mandy Neal.

The Times reported how Ms Neal ended up having to sell the contents of her home to meet legal costs of £300,000 that mounted up in a no win, no fee case.

Ms Neal had instructed solicitors to bring a negligence claim, and funded the claim by entering into a conditional fee agreement. The matter was settled without the need for a trial. However, the sting in the tail was that the settlement in no way covered all of her costs, for which she was liable as she had won the case.

Ms Neal is not alone in this. She is one of a growing number of people to have voiced their concerns over no-win, no fee cases.

These deals can be a lifeline for people without the means to cover costs upfront. But they need very careful consideration.

A client does not have to pay their solicitor’s costs if they lose, but if they win they do.  

On top of that, they can be liable for a further success fee and an after event insurance premium. The real sting in the tail is if the damages won are not enough to cover these costs. In such cases, it leaves the winner worse off than they were in the first place.

It’s no wonder then that the legal ombudsman now wants the term “no win, no fee” phased out. While conditional fee agreements can be suitable for some cases, it is often the case that it better to look at other methods of funding.     

Otherwise it just seems like it’s still no win, just with a very hefty fee.

For further advice on this issue, readers can email Robert through robert.weston@mfgsolicitors.com

Robert Weston is a Tier One rated lawyer in the 2017 Legal 500.

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