What You Didn't Know About No Win, No Fee Agreements

Part 1: What is a Win?

Running a court case is very expensive, involving the time and expertise of lawyers on both sides as well as the costs charged by the court itself. In an effort to drum up extra business from people who might otherwise be cautious or unable to afford to fund their case, some firms will enter into a conditional costs agreement, more commonly known as a no win, no fee agreement.

On the surface these do exactly what they say: if you don't win your case, you don't have to pay your lawyer's fees. It sounds wonderful and it begs the question: what have I got to lose? The answer is actually still quite a lot.

There are many different ways a dispute can turn out but most people only think of two, either they win or they lose. The no win, no fee agreement seems to operate well in both cases. If you win, you get a payout and your lawyer is paid from that while if you lose then you don't have to pay your lawyer anything. Looking at it that way it appears that there's really no downside.

In reality that will almost never be the case. A clause common to no win, no fee agreements is one which defines what counts as a 'win'. That might seem obvious to most people but a court case can finish not just with the decision of a judge but also by any deal which both parties agree to. Winning might therefore be defined as something like "Any decision in your favour by a judge OR receiving a settlement offer of more than $X". The number which appears as the minimum satisfactory settlement offer may also have more to do with the amount needed to cover the lawyer's fees than the amount of your claim.

Regardless of the costs agreement, accepting or rejecting an offer is always up to you as the client. Therefore the no win, no fee agreement will also often have an out-clause for the lawyer which states that if you don't follow their advice or you reject a reasonable offer, they will resign as your lawyer and their fees will be payable immediately.

Therefore, even though a no win, no fee agreement may appear to have no downside it is possible that its terms may place you at odds with your lawyer or see you having to accept a settlement which is lower than you might have wished. It may in fact serve you better not to tie your lawyer's fees to the outcome of your case in order to avoid such a situation.

Before entering into a no win, no fee agreement it important to understand the terms of what you are agreeing to and how it will operate in a variety of circumstances. Most important of all though is finding the right lawyer who will represent you to the best of their ability no matter how your case may proceed.