In the UK ‘No Win No Fee’ describes the Conditional Fee Agreement (CFA) between a claimant and a law firm. ‘No Win No Fee’ claims are not usually available for family or criminal matters and tend
to be suitable for personal injury and compensation claims. The system first came into place in 1995 in order to give people a chance at justice who would previously not have been able to afford legal
representation. ‘No Win No Fee’ was intended to replace legal aid.
The agreement is between the lawyer and the client and simply means if the lawyer is to lose the case they will not be paid by the client. The client will, however, be required to pay the defendant’s costs if this is the case. In the event of the lawyer winning the case, they are entitled to charge their standard fee, plus what is known as a success fee. In the UK this fee cannot be greater than the lawyer’s standard fee.When a CFA is entered into, it is common for a solicitor to purchase After the Event Insurance (ATE) on behalf of the client in order to protect thm from an adverse cost order. The adverse cost order simply refers to the legal fees of the defendant. ATE insurance is designed to protect the client from these costs and often covers the solicitor’s disbursements if the case is lost at trial, discontinued or there is a disbursements shortfall when a client wins. A client is still at risk to court orders even in the event of an admission of liability from the defending party.
If a solicitor loses a case for a client and has not advised them of the existence of ATE insurance there is the potential for a claim against the solicitor or their firm for negligence. There are several alternatives to ATE insurance such as Legal Expenses Insurance (LEI), which is known as Before the Event Insurance (BTE).LEI is insurance a client may already hold as part of an existing insurance policy; possibly Household or Car Insurance. Some credit cards also offer types of BTE Insurance or it can be taken out as a separate policy. LEI will often pay for the legal costs a policy holder incurs when claiming compensation; whether that policy holder wins or loses.