Weaknesses in No Win No Fee agreement

No Win No Fee lawyers as the name suggests, work on the principle that they do not get the fees if they do not win the case. The idea is to allow for people to make personal injury claims even if they cannot afford to pay the upfront fees. But this has not come without other problems.

In this article we look at practices that a lawyer uses while designing the contract, so that the term No Win No Fee becomes misleading. Some of these contracts are designed in such a manner that the client ends up paying the costs even if No Win No Fee lawyers lose the case. In some cases it has been seen that the client ends up paying out of his pocket even if he has successfully won the claim.

These weaknesses can be grouped under two heads: transfer of risk and unclear terms and conditions.

There is, in theory, a risk that a lawyer taking up No Win No Fee litigation faces. But if he is chooses his cases wisely, the occasional loss would easily be compensated by success fees he receives on other cases. But if a lawyer, by sheer bad luck or a bad choice of cases, ends up losing a string of such cases, it has been observed that he tries to pass through the costs of his mistake by going back on the fundamental terms of the contract.

The legal ombudsman has received multiple cases in which the client has been asked to pay upwards of £15,000 for the mistakes of the lawyers. Ombudsman has found in many such cases that the agreement was misrepresented to the client and a promise was made that she will not have to pay if the litigation is not successful. With the involvement of ombudsman, the lawyers were forced to honor the initial agreement. But not all cases come to the ombudsman, and the trend is frightening.

The trouble with unclear terms and conditions is something that can sore even a win that a claimant scores. CFAs and the newer DFAs are complex contracts and not something a layman can understand easily. It is important that No Win No Fee lawyers explain the risks involved and the limitations of the promise inherent in No Win No Fee.

It has been observed that quite a few cases coming to ombudsman have to do with payment of success fees. On investigation, it is found that the way the costs and disbursements would be recovered was not thoroughly understood by or explained to the client. Many of them are under the impression that a win would mean that the lawyers would be compensated by the losing side and 100% of damages awarded would be available to them. Sadly that is not the case.

Before one gets into a No Win No Fee agreement it is paramount that the buyer reads and understands all the terms and conditions involved.

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