Legal work can be massively expensive. Unfortunately, often those most in need of help and advice are the least well placed to meet such costs. Indeed, aside from the stress of the case itself, the cost of litigation is one of the biggest concerns for anyone who finds themselves in a position where they need to take legal action.
More commonly referred to as a ‘no win, no fee’, conditional fee agreements (CFAs) provide an alternative way of funding certain types of proceedings. Though not all firms offer such agreements, those that specialise in winning their clients compensation in personal injury claims and other similar work will often employ them as standard procedure.
A CFA is a binding agreement that states that the fees and expenses incurred in the course of your case will only be payable in certain circumstances. What these circumstances will be exactly varies from agreement to agreement, but in general the key condition will be that your case is won.
Obviously, this arrangement means your solicitor has no guarantee of being paid for their work. To offset this risk, it is common for a ‘success fee’ (a bonus beyond their standard fees which is payable in the event that they win) to be a feature of CFA. This extra cost is normally expressed as a percentage of the standard fee and cannot exceed 100%.
However, if you’re pursuing a compensation claim, you needn’t necessarily worry about success fees diminishing your settlement. In cases where there is a dispute, it is standard practice for the loser to pay the winner’s costs, including any success fees. Of course, the order for the losing party to pay costs is at the judge’s discretion and, therefore, cannot be guaranteed.
By the same token, as losers generally pay the other side’s costs, if you do engage a solicitor to work for you on a ‘no win, no fee’ basis, you’re still putting yourself at risk financially. Though you won’t have to pay your own solicitor, you may need to pay the other sides should you lose.
One way of mitigating this risk is to take out legal expense insurance, which will cover you in the event that you do end up incurring fees. Fortunately, you can obtain this insurance even after proceedings have been planned or commenced. This is known as ‘after the event’ insurance. Before you take out such a policy, be sure to check that you’re not already covered for legal expenses as part of one of your existing insurance plans. Policies such as home insurance often contain ‘before the event’ legal expenses cover for scenarios where you need to bring a claim against someone for compensation relating to your house, a negligent plumber for example.
Though they can be acquired independently of each other, it’s common for legal expense insurance to be taken out in conjunction with a conditional fee agreement.
- A CFA could help you get the compensation you need following a road traffic accident. If you’ve suffered neck injuries in a crash thanks to the carelessness of another driver, be sure to read our guide to whiplash compensation.
- Not all compensation claims will require the help of legal professionals. If you’ve been mis-sold payment protection insurance for instance, you should be able to receive the money you’re entitled to without any outside help. Take a look at our guide on what to do if you’re owed PPI for more information.