How a no win no fee agreement works
"No win no fee" usually means a conditional fee agreement, or CFA. The solicitor agrees that you will not pay their fees if the claim fails. If it succeeds, two things happen:
- The other side pays a contribution to your legal costs. In most claims up to £100,000 this is a fixed amount set by the court rules.
- Your solicitor can charge you a success fee, taken from your compensation, as a reward for the risk of working without payment.
A less common alternative is a damages-based agreement, where the solicitor takes a percentage of your compensation instead of charging a success fee. The same 25% cap applies in injury claims.
The 25% cap: what it covers and what it doesn't
For personal injury claims, the success fee cannot be more than 25% of:
- general damages for pain, suffering and loss of amenity, and
- damages for past financial losses, such as earnings and expenses up to the date of settlement
after any state benefits that have to be repaid are deducted. The 25% includes VAT. Damages for future losses are protected and cannot be used to pay the success fee. That protects the money meant for future care, treatment and lost earnings.
Here is how that works on a claim that settles for £20,000:
| Part of the award | Amount | Counts towards the cap? |
|---|---|---|
| General damages (the injury itself) | £12,000 | Yes |
| Past lost earnings and expenses | £3,000 | Yes |
| Future physiotherapy and lost earnings | £5,000 | No |
| Maximum success fee | £3,750 | 25% of £15,000 |
The cap is a maximum, not a standard rate. Many firms charge less, especially for straightforward claims.
Other deductions to ask about
The success fee is not always the only thing taken from your compensation.
- After-the-event (ATE) insurance. Many solicitors take out a policy that pays expenses such as medical reports and court fees if the claim fails. The premium usually comes out of your compensation if you win, and you pay nothing if you lose.
- Shortfall in basic costs. Some agreements allow the solicitor to charge you the difference between their full costs and the amount the other side pays. Reputable firms usually limit your total deductions, but you need to check.
- Unrecovered expenses. Occasionally an expense such as a report the court decides was unnecessary is not paid by the other side.
The most useful question to ask is: "What is the most I could pay in total, as a percentage of my compensation, if I win?" Ask for the answer in writing.
What happens if you lose?
In most cases, nothing. Since 2013, a rule called qualified one-way costs shifting means that an injured person who loses their claim is usually protected from paying the other side's legal costs. That protection can be lost if the claim is found to be fundamentally dishonest, or is struck out.
Read the agreement for situations where you could still be charged, for example if you:
- end the agreement early without a good reason
- do not cooperate with your solicitor or give misleading information
- reject an offer your solicitor advises you to accept and then receive less at trial
Small claims and whiplash: why the maths is different
In the small claims track, which covers most road traffic injury claims worth £5,000 or less for the injury, legal costs generally cannot be recovered from the other side. A solicitor who takes a whiplash claim on a no win no fee basis is paid entirely from your compensation, up to the 25% cap. That is why many people with minor whiplash use the Official Injury Claim service themselves. Our guide to claiming whiplash without a solicitor runs through the numbers.
A worked example
A warehouse worker injures their back lifting badly stacked stock. The employer admits fault. The claim settles for £9,000 in general damages and £2,400 in past lost earnings, with no future losses.
- Eligible damages for the cap: £11,400
- Maximum success fee at 25%: £2,850
- The firm actually charges 20%: £2,280, plus an ATE premium of £250
- The worker keeps £8,870
The employer's insurer separately pays the fixed recoverable costs set by the court rules, so the worker is not paying the firm's whole bill.
Questions to ask before you sign
- What percentage success fee will you charge, and when could it change?
- Will you take out ATE insurance, what does it cost and what does it cover?
- Could you charge me any shortfall in your basic costs?
- What is the maximum total deduction from my compensation?
- In what situations could I have to pay anything if the claim fails?
- Who will handle my claim day to day, and how often will I hear from you?
- Do you pay or receive any referral fee connected to my claim?
Your rights
- Cooling-off period. If you sign the agreement at home, by phone or online, you usually have 14 days to cancel.
- Referral fees are banned. Since 2013 it has been unlawful to pay or receive a referral fee for personal injury work in England and Wales.
- Claims management companies must be authorised by the Financial Conduct Authority. Check the register before dealing with one.
- Complaints. Complain to the firm first. If you are not satisfied with the response, you can go to the Legal Ombudsman. Concerns about a solicitor's conduct can be reported to the Solicitors Regulation Authority.
Before you choose a solicitor
Check whether you already have legal cover. Many car and home insurance policies include legal expenses insurance, and trade union members often get free legal help for injuries at work.
To get a rough idea of what your claim is worth, and so what a 25% deduction would mean in pounds, try the UK compensation calculator.
Calculator
Total your financial losses
Work accidents, trips and falls, fractures. Guideline brackets plus your losses.