Wednesday, May 26, 2010

No Win No Fee

"No Win No Fee" in the UK is the term used to describe the Conditional Fee Agreement (CFA) between a law firm and their client. In any claim (Commercial or Personal Innjury), this is an agreement between the client and their lawyer, which will enable the lawyer to take on a case on the understanding that if they lose the case, the client will not have to pay their lawyer’s costs, but will still be responsible for the defendants costs if the case is lost.

However, if the lawyer wins the case they will be entitled to their standard fee plus an uplift referred to as a success fee. In English law, the success fee cannot be greater than 100% of the lawyer’s standard fee.

If the client wins their case, either the Courts or the losing party’s will make an award of damages. In addition, the defendant will be required to pay the client's legal costs including any uplift of fees as well as expenses. With most Conditional Fee Agreements, the client will have nothing to pay and will receive 100% of any compensation awarded in their claim.

To protect a client from an adverse cost order (meaning having to pay the costs and fees of the defendant if the client is not successful) a soliciotr can purchase an After the Event Insurance (ATE) is the term used to describe the type of funding document, which is normally obtained by a lawyer acting on behalf of their client. This is generally taken out at the outset of a claim, when a Conditional Fee Agreement (CFA) is entered into. ATE insurance is designed to protect the client from the risk of legal costs and disbursments of the defendant and usually covers the clients own disbursments if the case is either discontinued, lost at trial or any disbursment shortfall even if the client wins, an admission of liability still leaves the client at risk to cost orders, solicitor clients need to be aware that if they lost there case or a solicitor has discontinued there case and the client was not advised of ATE insurance than there could be a potential claim against the clients solicitor for negligance.

In addition, there are a few alternatives to ATE for funding a personal injury claim.

These include:
Legal Expenses Insurance (LEI), often referred to as Before the Event (BTE) Insurance
• Legal Aid
• Paying for own Legal costs

Legal Expenses Insurance

This can also be referred to as before the event insurance (BTE), and is insurance that the client may already hold as part of Household contents or Car Insurance, either free or for a small fee. Some credit cards also include BTE insurance and it can also be taken out as a separate insurance policy. BTE insurance may pay for the legal costs when making a claim for compensation, whether the client wins or loses. Your solicitor will be able to identify if a client holds this type of policy and complete the necessary claim form. The 2008 report from the Ministry Of Justice found that in 2007, 48% of those who took part had BTE Insurance incorporated into their car insurance, 35% had BTE Insurance as part of their Home insurance policy and a further 17% had the insurance as part of their Travel Insurance. This insurance covers any legal expenses in addition to costs for pursuing a personal injury claim and cost for legal expenses from the other side if the client's claim in unsuccessful.

Legal Aid

Legal Aid is financial assistance which is funded by the Government. Legal Aid is not usually awarded in cases of personal injury unless under extreme circumstances. Legal aid is still available for Clinical Negligence cases.

Paying for own Legal costs

Due to the assistance that is available through insurance policies it is rare that an individual will fund their own personal injury claim although it is possible. As with all Legal fees if the client's claim is successful they will be in a position to claim back the cost of their expenses from the other side. If their claim is unsuccessful they will lose the money that they have paid out.

Guide to Conditional Fee Agreements
Conditional Fees: Law and Practice