"No Win No Fee" means exactly what it says. If you make a personal injury claim which is unsuccessful you don't pay your lawyer a penny. But that could be about to change warns Stuart Kightley.


That was then

Before 1995 if you suffered an accident or injury at work you only had 3 funding options:

• Legal Aid – available if you were on an income low enough to qualify
• Trade union assistance – if you were a union member
• Pay legal fees yourself – and your opponent's legal fees if you lost the case

Consequently, a great swathe of Middle England – so called MINELAs (Middle Income Not Eligible for Legal Aid) were effectively disenfranchised from the civil justice system.


This is now

In 1995 the Government legalised Conditional Fee Agreements, better known as "No Win no Fee" agreements.

Now the accident victim (the claimant) only pays their lawyer a success fee if they win their case. If the claimant loses their lawyer is not paid, and indeed may be stuck with the cost of legal expenses (court fees, medical expenses etc).

The success fee, which is a cut of the damages owed to the lawyer for winning the case, is capped by law at 25% of damages.

And in a successful case the claimant can also recover most, if not all, of their costs from their opponent.

Since 1999 the success fee has been recoverable from the defendant (who after all caused the damage) rather than from the claimant (who was the victim).

So if a claimant wins they can often obtain a guarantee from their lawyer that they will retain 100% of their damages.

In this scenario there is no deduction to cover any part of the legal costs. The lawyer keeps what he can recover in fees from the opponent.

This is not a perfect system but it offers certainty and risk-free litigation for claimants. It guarantees them access to justice.

Future Imperfect?

All is about to change, with the publication of the Jackson report on civil costs in January 2010.

Lord Justice Jackson considers it unfair that defendants or their insurers should have to pay success fees; his report recommends that the government repeals the legislation under which they currently pay them.

Jackson suggests we go back to the old regime where success fees are paid by the claimant.

After all, he says, it is not right that claimants should be allowed to litigate without any personal risk to themselves whether they win or lose.

He would compensate claimants by increasing damages for pain and suffering by 10% and protect them by capping any success fee at 25% of their damages and ring fencing future losses (such as care claims).

It could be argued that claimant lawyers should do without success fees. After all they get paid if they win and should not take on cases that they will lose.

But the reality is that there are a large number of claims that are potential winners at the outset but which lose because of insufficient evidence or lack of fault on the defendant's part or any number of other reasons.

Ours is a fault-based system where the claimant needs to prove duty, fault, and the extent of his loss in order to win his claim and maximise his damages. That is why he or she needs a lawyer.

Without legal aid, it is claimant lawyers who provide access to justice for injured people. None can work for too long without getting paid and the lawyers need a success fee on the winners to be able to take on a broad range of cases.

Without the success fee lawyers will inevitably choose to run only the simpler and less risky cases.

Are claimants prepared in the future to pay up to 25% of their compensation in costs, where they currently pay nothing?

Is it right that they do so?

They may have no choice if these reforms are implemented, but it is a sorry state of affairs that will see the insurance industry rid themselves of the cost of success fees at the expense of the injured claimant.

The Association of Personal Injury Lawyers, a campaigning organisation that fights for the rights of injured people, will be challenging the Jackson findings on this and other issues.

See their press release here.

Another option recommended by Lord Justice Jackson is that parties be allowed to enter into Contingency Fee Agreements for the first time in personal injury and other litigation.

The Contingency Agreement differs from the Conditional Fee Agreement in that all the legal costs are payable by the claimant as a percentage of the Contingency Agreement.

No part of the costs are recovered from the defendant. Again, the injured person is taking over from the defendant the burden of his legal costs.

If the Jackson report is implemented then "No Win No Fee" agreements will survive, but not in their current form.

Accident victims will find that that they need to add on to the "No Win No Fee" label the tag "Win = 25% Fee".