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What is a No Win No Fee agreement?

A no win no fee agreement in simple terms means you will not be charged if your claim is not successful. It takes all the risk out of making a claim.

You will not be charged any upfront payments and if you do not win your case you have nothing to pay to your solicitor for the work carried out.

You may only have to make a small contribution from any compensation awarded when your claim is successful. 

The History of Conditional Fee Agreement (No Win No Fee)

Up until the 2000s the system used to be that if you used a solicitor you would receive a monthly bill for their fees.  Generally, the loser pays the winner’s costs, so if you won a case you received your compensation (also known as “damages”) and reimbursement of your legal expenses.

Following reviews in the late 1990s it was appreciated that this system could prevent people less well off from pursuing legal matters because even if they had a good case they could not afford to bring the case.  A decision was made to introduce a brand new system being the “conditional fee agreement” or now more commonly known as “no-win-no-fee”.

With no win no fee, your solicitor does not require you to pay a monthly bill but keeps a record of the costs built up on the case.  If the case wins the solicitor can recover those costs from the losing party; if the case does not win the solicitor has to cancel their bill and therefore makes a loss.

The no win no fee system therefore transfers the risk from the client to the solicitor.

From a legal perspective, even though the client does not receive monthly bills they still owe the solicitor the money spent on the case so as to recover their costs from the losing party the solicitor has to be able to prove their client owes them their fees.  For this reason do not worry if your no win no fee agreement contains phrases such as “what you have to pay” and hourly rates – although this is confusing, it is legally correct.  The key part that protects the client is the part of the no win no fee agreement which states if the case does not succeed the fees will be cancelled.

Therefore, the combination of the fact the defendant will reimburse your solicitor for your legal costs if you win, and the fact the solicitor has agreed to cancel their fees if the case does not win, means the client is protected.

Things to watch out for:

Numerous solicitors add in extras onto the 25% deduction such as VAT or other fees. This is illegal – the 25% deduction is all inclusive and the maximum.

Many solicitors have commissions from legal expenses insurance premiums.  A number of large, national personal injury firms are pressing all clients to take out legal expenses insurance policies with large premiums, sometimes over €1,000, which are then deducted from their compensation at the end.  Not every client will need a legal expenses insurance policy and even if they do, for lower value accidents they should only be a few hundred euros.  Be wary of this and question your solicitor as to whether you need one and whether the firm receives a financial benefit from the policy

For example, if someone suffers a serious injury and has say €10,000 injury compensation but €100,000 future loss of earnings compensation, the 25% is €2,500, not €27,500! 

A number of firms seek to lure clients in with promises of 0% deductions from their compensation, but then have alternative means of recovering that money such as inflated insurance premiums or other hidden charges.  Remember, if it sounds too good to be true it probably is!

For more information on this article or if you require assistance on a case please do not hesitate in contacting one of our qualified solicitors at personalinjuriessolicitorsdublin.

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