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Why "No Win, No Fee" can be "No Win, Still Pay"

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It may surprise people that even if you have a “No Win No Fee” agreement with your lawyer for litigation you may have to pay legal fees and costs should you lose the case. Although on the face of it this seems to be wrong it is worth exploring why this may be the case and how this can happen.

What is NO WIN NO FEE?

A No Win No Fee agreement (sometimes called a Conditional Fee Agreement or CFA) is where a client enters into an agreement with their lawyer whereby they only pay their lawyers fees if the claim is successful and if it isn’t then they don’t have to pay their lawyers anything. No Win No Fee agreements can be a very useful tool to allow access to legal assistance if you don’t have the money to pay for expensive litigation. It can also minimise your financial exposure should you lose the case.  

However, all may not be as it seems despite some very aggressive marketing from lawyers and claims management companies (CMC’s)  trying to capture legal work on the basis of a “No Win No Fee” agreement. Over the last few years many countries have embraced the concept of “No Win No Fee” litigation when in the past they were prohibited from entering into such arrangements. In Spain, for example, such arrangements were outlawed until recent years. When a country starts to allow such agreements you tend to find a sudden influx of companies offering them and making wild claims to potential clients about how successful they will be and how there will be no risk to you to instruct them. Sadly the reality is often very different.

Do I need to pay anything up-front to my lawyer?

It might be correct that on a “No Win No Fee” agreement with your lawyer you won’t have to pay anything up front and only have to pay them if you win the case. However, there may be other charges that need to be paid throughout the course of a case. In litigation in a foreign country these could include translation costs, legalisation costs, barrister’s fees, Court fees and so on. These don’t form part of the lawyers’ fees and therefore it is likely that you will still have to pay these despite an agreement that you don’t have to pay the lawyer anything for their fees unless you win.

What happens if I lose my case?

Even worse than that is the fact that if you lose the case the Court may order you to pay the costs of the other side in the litigation, which will include their legal fees. The cost that can be incurred by the other side can be surprisingly high, particularly if you are making a claim against an institution such as a bank who will have deep pockets for legal fees. The legal costs of the other side can amount to tens of thousands of Pounds. In that sense you could lose the case but still have to pay legal fees – meaning “No Win, Still Pay” and sometimes the cost is surprisingly high.

Can I take out Insurance to protect me if I lose?

In the UK there is normally an insurance policy in place to cover such eventualities. The insurance policy will the costs during the litigation and also cover the eventuality that you are ordered to pay the cost of the other side. Unfortunately in many foreign countries it isn’t possible to get such insurance policies, which means that clients are at risk of costs both during the litigation and even if they lose. 

A good lawyer will talk you through these risks and possibilities even if they are going to act for you on a No Win No Fee basis. This is soNo win no fee sign that you enter into such an agreement in full knowledge of what you will have to pay during the process and also what your exposure is should you lose. A poor lawyer or claims management company will concentrate on capturing you as a client and will play up the chances of success in your case and will probably not even discuss with you what costs you will still have to pay until they have you signed up. Worse than that some won’t even advise you as to the risk of having to pay the costs of the other side. You should therefore be wary of companies that market themselves heavily on the basis that if you don’t win the case you won’t pay anything as everything may not be as it seems.

If you have an issue overseas and wish to discuss your options, chances of success in the claim and funding options please contact us