No win no fee

Is it really free?

Understanding costs

There are two potential elements of costs which can be linked to making a claim.

The first element is the fee charged by legal advisers or claims management companies ('CMCs') for their work.
The second element is costs your legal adviser or CMC may pay out on your behalf while working for you but then ask you to repay to them. These are known as disbursements. They can include things like application fees. They can include set fees for certain legal checks. There may also be an insurance premium if a policy is taken out.

There may also be other costs. These can be for charges by outside experts or other organisations that do work as part of a claim. For example, a private medical examination might be needed.

How are these costs paid?

If your claim is successful, your legal adviser or CMC may take a fee to cover the costs they incur in handling the claim. This can be a percentage of the compensation. Repayment of any disbursement costs may, or may not, be on top of this fee.

If your claim doesn’t succeed, you typically don’t pay your legal adviser or CMC for their costs. But you might need to pay the other side’s costs.

Before you start your claim, your legal adviser or CMC should tell you what arrangements - if any - are in place to pay for disbursements and the other side’s costs if your claim doesn’t succeed. This might include the firm arranging insurance. Insurance protects you by covering any costs if the claim doesn’t succeed.

You can and should expect your legal adviser or CMC to set out how the details of the way the claim will work. This should happen before you agree to use their services. They should set this out in a way that clearly shows what fees you might be liable for. They should tell you how these costs will be met, if your claim succeeds or if it doesn't.

You can find out more Conditional and contingency fee agreements here.

What can go wrong?

Is there any risk of paying costs if I sign up to a 'no win, no fee' agreement?

Lots of people have benefited from 'no win, no fee' agreements. Usually, they work as expected.

But these agreements are not completely free of risk. You will need to look at the details of your individual agreement. And there are sometimes cases where you may end up having to pay very high costs. For instance:

If you decide to stop making a claim half-way through the process (If you leave a claim part of the way through, you may be charged fees. These could be very high.)
If you don’t co-operate with your legal advisor or CMC or if you don't provide full and accurate information
If you need to pay for costs your legal adviser has incurred on your behalf (These are known as disbursements. You may have to pay additional costs to suppliers. This could be for outside experts who helped with your claim.)
If your claim doesn't succeed and you need to pay the other side's costs
If your legal adviser or CMC doesn't manage the claim properly. (This might leave you liable for the other side's costs.)

If your legal adviser or CMC doesn't manage the claim properly - leaving you liable for costs - you may be able to make a claim on their insurance. Regulated legal services providers, for instance, must have professional indemnity insurance in place. But trying to get money back this way could be a stressful and lengthy process. And it may require more legal advice.

You need to be aware there is always a risk that a litigation claim will not succeed. Even if a claim is well managed, there is a risk it will not succeed. You should talk with your legal adviser or CMC about the real chances you claim will succeed. You should also talk about what you may have to pay if your claim doesn't succeed. You should talk about all of this before you agree to go ahead with a claim.

Know what to look out for before agreeing to a third party acting on your behalf

As a client, you have rights. Your legal adviser and anyone with whom they work, such as a claims management company, should uphold these rights.

Your legal adviser or CMC must make sure you can make informed decisions about your options.
You have the right to clear, upfront information about costs. This should include full information about what fees you might be liable for. It should include how these costs will be met, if your claim succeeds or if it doesn't.
Your legal adviser or CMC should tell you about the professional indemnity insurance they have in place. They should set out how and when this will protect you.
Your legal adviser or CMC must act in your best interests. They must keep you updated on progress and developments. They should update you promptly throughout the life of your claim.

Choosing the right legal adviser or CMC is crucial to making sure your claim is handled professionally and ethically. You may want to ask yourself these questions:

Are they regulated by a legal services regulator or by the FCA?
Are they transparent about costs? How will costs be met if a claim doesn’t succeed?
Are they clear about the risks of making a claim? Do they answer your questions?
Have they told you about any potential options for submitting a claim yourself?
Are they clear in their communication? Do they reply promptly to your queries?
Does the legal adviser or CMC have professional indemnity insurance in place? (This can offer you protection if they mismanage the claim.)
Have you shopped around for different legal advisers or CMCs? Have you thought about the different amounts legal advisers or CMCs will take if you win?
Have you checked if it’s possible to access compensation schemes or statutory redress without legal representation?

Red flags

Be aware of these warning signs. They could show that a legal adviser or CMC is not acting in your best interest. They could be breaking rules:

They have contacted you through cold calling, door knocking or some other way that you didn’t ask for.
You feel you’ve been put under pressure to sign an agreement.
They are unclear about who is managing your claim. It’s not clear who your legal adviser or CMC is.
Their fee structures are vague.
They suggest that there is no risk to a claim. Or they suggest there is no outcome in which you could ever incur costs.
They are not clear about how costs will be met if the claim fails.
They don't seem interested in the details of your claim.
They refuse to answer your questions. They seem evasive. They give you documents that you can't easily understand.

Tips to help you

Dos

Do think through your options. Could you make a claim on your own? Have you compared different legal advisers or CMCs? For instance, have you looked at online reviews? Have you thought about the different amounts of money legal advisers or CMCs will take if you win?
Do check who you are dealing with. Find out who is managing your claim and who your agreement is with. Be cautious about signing if it's not clear who the legal adviser or CMC is.
Do your research. Read online reviews or case studies and check the track record of a legal adviser or CMC. Find out if they are regulated and have professional indemnity insurance. This can protect you if they mismanage a claim.
Do ask for easy-to-understand documents. Pay attention to the small details. Ask to have anything you do not understand explained.
Do ask questions about costs. Find out what percentage of your compensation award will go to your legal adviser or CMC if you win. Ask questions about how costs such as disbursements, experts’ fees and the other side's costs will be covered if a claim fails.
Do seek independent advice. If you are unsure of a legal adviser or CMC, get in touch with a trusted source like Citizens Advice before you sign.

Don'ts

Don't ignore red flags. Be cautious of legal advisers or CMCs that contact you through cold calling or door knocking or use high-pressure sales tactics. Regulated legal advisers are breaking rules if they are involved in such activities. Avoid those who are vague about their fees or who are unwilling to give you clear answers.
Don't rush to sign. Take your time to get to grips with the options. This can help you make an informed choice.
Don't assume 'no fee' means 'no cost'. All legal actions potentially result in costs. Ask the legal adviser or CMC who will be liable for costs and in what scenarios you might have to pay costs.
Don't forget to keep records. Save all communications, contracts and updates about your case in the event of a potential dispute.

Questions to ask before signing

Do I really need a legal adviser or CMC to manage my claim?
What are the success fees if I win?
Are there any upfront costs?
Can I take out insurance to cover any upfront costs and the risk of the other side's costs?
What arrangements are in place to cover costs if my claim fails?
What happens if the case is closed before it reaches a conclusion or I change my mind about pursuing action?
Is the legal adviser or CMC regulated? Who is the regulator?
If the legal adviser or CMC is regulated, what protections does this give me?
Who will handle my case? Will I be assigned a specific advisor or will many people run my case?
How will I be kept updated about the claim?
Realistically, do I have a claim? And what are the chances of success?
What is the timeline for my claim?
Are there any red flags that suggest the firm may not be acting in my best interest?
Have I checked the track record of the firm or those who will be handling my claim?

Who can help?

Choosing who to work with

If you're thinking about making a claim, you can usually choose between legal advisers or CMCs. You have the option to use a CMC or a legal adviser.

Claims management companies (CMCs) are firms or individuals that can help you make a claim for compensation or other benefits. They may deal with the claim themselves. Or they may refer you to other CMCs or legal advisers.

Regulated legal advisers can carry out the same work as CMCs. They can also provide legal representation. Their expertise may mean they are able to handle more-complex claims.

Always check if a legal adviser or CMC is regulated by:

the Solicitors Regulation Authority (SRA)
another legal services regulator or
the Financial Conduct Authority (FCA).

In most cases, legal advisers or CMCs will be regulated. This offers you extra peace of mind and protection. It means they must have gone through certain approvals to meet regulations.

You can check if a CMC or legal adviser is regulated by searching:

Do I need to use a legal adviser or CMC to make a claim?

Not always. It will depend on several things. You may be able to pursue the claim yourself. That way, you can keep any damages/losses awarded if your claim succeeds. Some claims are quite simple. For instance, you may be making a claim for compensation through an ombudsman. There are websites that can help you decide if you need a legal adviser or CMC. And they could also be useful to you in making your claim:

Making a claim yourself may be harder if the case is complex. It can also be harder if you need to go to court. You might need a legal expert to help you.

About no win, no fee

Why might I choose a ‘no win, no fee' agreement?

Getting expert legal help – and going to court – can cost a lot. And if you don’t win, your costs can be even higher. When ‘no win, no fee’ agreements work well, they can help you get the help you need to enforce your rights. And this may be something you could not afford to do otherwise. ‘No win, no fee’ agreements can also lower the risks to you if you don’t win.

What is a ‘no win, no fee' agreement? How should it work?

A 'no win, no fee' agreement (which might be either a conditional fee agreement or a damage-based agreement) lets you pursue legal claims using the expertise of a legal adviser. It usually does so without any upfront costs.

A conditional fee agreement is an agreement between a legal adviser and client that lets them share the risk of a legal case. The legal advisers' fees, partly or fully, will only need to be paid by the client if the claim succeeds.

A damage-based agreement is also an agreement between a legal adviser and client to share the risk of a legal case. But the client only pays the legal adviser's fees, costs and VAT if the case meets pre-defined success criteria. These are set out at the start of the case. The payment is often called a ‘success fee’. It is taken from a percentage of the money recovered from the other side. The limit on the percentage that the legal adviser can take from the money recovered will depend on the type of claim.