No win no fee: not always a good idea

Raymundo LarraĆ­n Nesbitt, September, 3. 2017

By Raymundo Larraín Nesbitt
Lawyer – Abogado
3rd of September 2017

 

 

No win no fee: not always a bright idea

 

Perhaps you have been assailed lately by enticing radio wedges softly cooing into your ear, or maybe you have felt drawn by tantalizing ads in glossy magazines, luring you into a new exciting world of promises of wealth and glory at (apparently) no risk to you with these four magic words: “no win no fee.”

Tempting as this may sound, there are in fact serious risks for a client if the agreement with a law firm is not worded properly. As can be read today in The Sunday Times, a woman was made homeless by her own law firm after she owed them £1m following a no win no fee case.

I had already admonished would-be litigants in my 2016 article Off-Plan Guarantees and Supreme Court Rulings – Payback Time on the consequences of failing a no win no fee case in Spain.

Most people that enter into these agreements with lawyers do so blindly without fully grasping what they are actually agreeing to. They wrongly assume that the worst case scenario entails losing their case and the money they are entitled to but at least, as self-consolation, they find solace thinking they won’t have to pay any legal bills. Wrong!!!

Instigating legal proceedings racks up huge legal fees and someone, sooner or later, will have to foot the bill. Make sure that when the lights go off, and the musical chairs swing to an end, you are not the chump!

 

Pitfalls of conditional fee agreements (no win no fee)

  • If your relationship with the law firm breaks down you may be forced to cover charges and expenses.
  • On winning, a law firm will claim its pre-agreed success fee. Some law firms charge a steep fee, so you may want to have in writing exactly how much they are entitled to on winning.
  • Should you lose, you may still be held liable to cover costs despite not owing fees to your lawyers i.e. court runner’s fees, witness reports, special reports etc.
  • On losing, the judge may rule that you must pay for ALL the other party’s costs, including their solicitor’s fees, their court runner’s fees, reports, expenses etc. Knowing lender’s lawyers, their fees plus expenses will likely be very steep (tens of thousands).
  • Delay interests are accrued on top of the owed amounts, mounting exponentially over time on non-payment or on filing counter claims.

 

Conclusion

No win no fee agreements represent a good opportunity for some litigants to foray into the litigation arena which would otherwise be barred to them for lack of funds; however, one should urge caution. Plaintiffs should be made clearly aware that litigation is a double-edged sword that is not exempt from risk, far from it. Some companies are not fully disclosing to their clients the associated risks they are assuming on accepting conditional fee agreements should they happen to lose their case. Obviously, the higher the odds of success, the less risk that is assumed but there is always an inherent risk because ultimately the outcome of rulings hinges on a judge's whim which I dare say may be somewhat fickle at times. Litigation is not an exact science with guaranteed outcomes because we move in-between shades of grey.

If you decide to brave into a new world, following a no win no fee, make sure you read the fine print and that all the above points I mention are fully covered to your satisfaction.

If not, you may find yourself losing and the other party will place a charge against your property for a substantial amount of money which may lead eventually to losing your property because of non-payment.

Or in the worst case, you may find yourself being made derelict by the very swanky law firm you hired so confidently on a no win no fee such as the one featured in the newspaper article.

All that glitters is not gold.” – Aesop.

Ancient Greek fabulist or story teller.

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, inheritance, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

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