Very quick responses to emails, also impressive tactically.
Let’s face it; litigation is expensive and is certainly not an item that everyone caters for in their monthly budget. Plus, there is the very fearful possibility that you will lose your case and not only will you be lumbered with your own legal fees but, as the loser usually has to pay some of the winner’s costs, you will be facing your opponent’s costs bill as well. Is it any wonder therefore why potential litigants want to reduce their exposure to costs as much as possible? And any wonder why I get asked the above question on a daily basis?
It is probably a good idea if I explain very briefly about how a Conditional Fee Agreement (“CFA” – the official name for a No-Win No-Fee agreement) works in civil litigation claims. (It works differently in personal injury claims so you will need to speak to a PI lawyer if that is the type of case you are looking at.)
If we enter into a CFA with you, we agree to defer our fees until the conclusion of the claim. If you lose your claim, our fees get written off – hence the nickname ‘no-win no-fee’. You may be liable for the other side’s fees but, we can usually obtain an insurance policy to cover you for that eventuality, if you don’t already have one (After the Event Insurance – “ATEI”) and possibly even some of the disbursements you may have had to pay out along the way – for example, expert’s fees, court fees etc.
If, however, you win your claim, then we will charge you our hourly rate plus a percentage uplift on those costs - known as a success fee. This percentage uplift is set at the outset of a claim and takes into account the risk that we will be taking in supporting your claim as, in effect, we will be gambling on the success of the case. The percentage uplift can’t exceed 100%.
As I have said, the loser usually has to pay some of the winner’s cost. In April 2013, the Coalition Government introduced some controversial changes that have brought great hardship to many people. The success fee and any ATEI premium are now something that the winner has to pay themselves. In addition, because the way the costs recovery regimen works in civil cases, we usually advise clients that they are probably only going to be able to recover about 70% of the base costs. The winner will be responsible for the shortfall. However, before you get worried that you will be paying out more than you win, those same changes in April 2013 say that any costs shortfall must be capped at 50% of your damages. Putting this into monetary terms, if you win £10,000 but there is a £6,000 shortfall on our costs, you will only pay £5,000 maximum; if there is a £3,000 shortfall you will only pay £3,000, no more, and so on.
Working under a CFA involves certain obligations and responsibilities that both parties to the agreement must comply with. Plus, the Agreement will cover issues like termination, interim payments and the like. Before you enter into any CFA with us, we will spend time with you going through a CFA and explaining to you the full effects and consequences of a CFA.
But going back to the beginning of this article and the question I get asked: “can you run my claim on a no-win no-fee basis,” what is the answer?
Well, as you can see, when we agree to take on a professional negligence claim under a CFA, we will be gambling on its prospects of success. Obviously, we will not take on cases with less than a 50-50 chance of winning, but for cases with a greater chance than that, we are often willing to take on the risk. To make that assessment, we are happy to review some of your papers to see if we think that there is a claim. If there are poor prospects of success, we will tell you candidly and discuss the other options available to you. If you choose not to take the matter further, we will not make a charge for our initial review. However, if we think the prospects are good enough such that we are happy to enter into a CFA, gambling our time and fees on it, you can be safe in the knowledge that your claim must have reasonable prospects of success if a lawyer is prepared to bet their money on it. After all, you must have heard about the philanthropic lawyer who wanted to remain anonymous? He refused to sign the cheques!!
Emma is a professional negligence solicitor and a member of the Professional Negligence Lawyers Association. Call her on 0808 139 1595 for an initial chat if you would like to discuss a new claim – on a CFA basis of course.