Print this page'No Win, No fee' agreements
- fuelling our compensation culture?
Principal Damian Short specialises in personal injury litigation and has particular expertise in representing those with acquired traumatic brain injury. In this article, Damian looks at ‘No Win, No Fee’ agreements – and his conclusion may surprise you...
When the government introduced ‘No Win, No Fee’ agreements (known in the trade as Conditional Fee Agreement or ‘CFA’s’), they were seen to offer justice to a large swathe of the population that did not have the financial resources to bring litigation - but were too well off to be eligible for Legal Aid. The idea was subsequently expanded to remove the need for Legal Aid altogether from a variety of different types of litigation, in particular personal injury claims.
‘No Win, No Fee’ agreements (what I will call CFAs) have become embedded in the minds of some parts of the public as, at best, the embodiment of ‘compensation culture’ – and, at worst, the root cause of the alleged breakdown in society.
I’ve explained CFAs to some people and, frankly, you’d think I was trying to force feed them something the cat had dragged in. I find this bizarre, as there is no doubt in my mind that, for many people, a ‘No Win, No Fee’ agreement on the type of terms available from many solicitors, represents an ideal way to fund their court case.
The legal costs you might face at the end of a court case are made up of the following three elements:
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The value of your solicitor’s time in dealing with the case
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The expenses (known to solicitors as ‘disbursements’) of proving the case
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The other party’s expenses and the value of the time spent by the other party’s solicitors on the case
In combination with an insurance product, the CFA can - when it is on the right terms - put you in a position where you will have nothing to pay towards any of the three elements of legal costs, whether the case is won or lost.
If the case is lost, the CFA writes off the costs of item one, above, and the insurance product pays for the cost of items two and three, including the cost of its own premium.
If the case is won, under the right CFA and provided that you have been honest and followed your solicitor’s advice, the only risk to you is that some of the expenses incurred (item two, above) are not recovered from the losing party and you’ll be liable for them. Having said that, it has been my experience that, subject to the above parameters, expenses are recovered in their entirety from the defendant...
As you will gather, the ‘right’ CFA (which includes the insurance element) is vital and any competent litigation solicitor would be able to advise you from the outset which is the most appropriate for your situation.
So, do CFAs represent access to justice or are they something the cat dragged in and the root cause of our compensation culture?
The main effect of the Act is to repeal the much criticised Statutory Dispute Resolution Procedures that were introduced in 2004. Clearly, without CFAs there is a large proportion of society which would not be in a position to fund litigation – and neither you nor I would deny someone the ability to fund their own case where they’ve been injured and lost their job, all through no fault of their own.
But what about the allegation that CFAs are the cause of compensation culture? Putting to one side the debate as to whether such a culture even exists, CFAs are in fact one of the best defences against such a culture. The heart of the compensation culture debate rests on the idea that claims with no merit are being brought which, for some reason, insurance companies are daft enough to pay out on. This just isn’t the norm; from an insurance company’s point of view, if they are faced with a case that they believe is without merit but which is funded by the CFA/insurance model, they have all the motivation they need to defend it. After all, their costs of successfully defending that case will be met by the insurance taken out alongside the CFA... And from a solicitor’s point of view, there is no point in bringing a case where you run a substantial risk of losing it and not being paid for your time. CFAs therefore discourage a solicitor from taking cases which have a substantial chance of being lost.
In short, CFAs actually help to prevent a compensation culture existing.
Find out how we can help you
For more detailed information on ‘No Win, No Fee’ agreements, please contact Damian Short on 01603 724673, or email djshort@cozens-hardy.com.
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