No Win No Fee: The Good, The Bad, and The Ugly

“No win, no fee” has become as familiar to legal advertising as "buy one, get one free" is to grocery stores. The concept seems simple: if you lose your case, you don’t pay your lawyer. But, the reality is often hidden fees, insurance costs, and pushy marketing, causing these arrangements to be not as risk-free as they sound.

Millions of pounds in compensation is awarded annually to consumers by the Legal Ombudsman, much of it stemming from misunderstandings in "now win, no fee" arrangements. The challenge of this arrangement is best understood by exploring the divide between the goals of lawyers and their clients. 

Here, we'll explore the red flags and finer details of no win no fee arrangements, so that you can know exactly what to look for when contracting a solicitor, and avoid unwanted surprises down the road.

How does no win, no fee work?

No win, no fee exists across the legal profession. But, it's most prevalent in personal injury claims, medical negligence, and housing disrepair, as these claims serve those less likely to have the money on hand to pay up-front legal costs.

Crucially, there are two different types of arrangement which are described by the phrase 'no win, no fee':

Conditional Fee Agreements (CFAs)

• You pay your lawyer’s hourly rate plus a “success fee” if you win.
• The success fee, also called uplift, is a bonus based on your lawyer’s costs, not your compensation.
• In personal injury cases, this uplift is capped at 25% of damages, and for employment, it's 35%.

Damage-Based Agreements (DBAs):

• Instead of hourly billing, your lawyer charges a percentage of whatever compensation you recover, typically between 25% and 50%.
• If you win £10,000 under a 30% DBA, your lawyer takes £3,000 and you keep £7,000.

In practice, you are more likely to see CFA, as law firms struggle to be as profitable within the regulations of the DBAs. Also, in areas where you can claim your costs back from the other party, CFAs ensure that you have calculated those costs.

Who pays when you lose a no win, no fee case?

Generally, all cases on CFA or DBA terms will require After-the-Event (ATE) insurance.

Incase your claim fails, this insurance covers the risk of paying the opposing side's legal costs (and sometimes your own legal costs too). The premiums for ATE insurance can be fixed, variable, or even a percentage of the claim value, and range from £100, to upwards of £1,000. They also vary depending on the estimated odds of success, claim type, and amount of cover requested.

Although your lawyer will typically be arranging your ATE insurance for you, it's important to be aware of any fine print. Common terms include requiring you to be honest, cooperate with solicitors, and accept any reasonable settlement offers.

Where does no win, no fee come from?

No win, no fee options were designed to replace the system for legal representation funding established by the 1949 Legal Aid and Advice Act, a part of social welfare policy. At that time, the state would fund legal representation for those who could not afford it in nearly all criminal or civil cases. 

As part of the cost-cutting neoliberal reforms of the 1980s and 1990s, eligibility for aid was cut and eventually privatised. Taking it's place were CFAs, introduced by the 1990 Courts and Legal Services Act, and expanded in 1999 so it could be used in most civil cases (though not family law). 

This fee structure is now commonplace, in personal injury 75% claims in the UK use CFA arrangements.

The good: what to look for from no win, no fee lawyers

Done properly, no win, no fee services can really improve accessibility. Look for providers who offer:

• Complete coverage. All court fees, representation costs, other fees should be included. You should pay nothing, regardless of the claim’s success.
• Clear charges. No hidden insurance premiums, loans, or interest.
• Straightforward terms. It is your lawyer’s job to ensure you understand everything. No jargon, complex terms, or “don’t worry about it”s.
• Proper case checks. A proper assessment of your chances should be done before you’re encouraged to bring a claim.
• Insurance clarity. It should be obvious who arranges the policy, who pays premiums, and what happens if anything is denied or disputed.

Organisations like Justice for Tenants show how this can look in practice: transparent terms, lower risks, and a client-first approach. As a non-profit organisation, they’re able to offer CFAs without the commercial pressure that compromise many private firms.

Two other key factors stand out in their model. First, unlike personal injury cases, housing disputes rarely result in orders requiring the losing party to pay the opposition's legal fees. Second, First-Tier Property Tribunals don't require barristers for representation, allowing services to avoid the high costs of counsel.

These structural advantages contribute to no win no fee housing organisations being able to offer more favourable terms than providers in higher-risk litigation areas.

The bad: what to be aware of with no win, no fee lawyers

Not every provider lives up to the adverts. It’s important to be conscious of common pitfalls including:

1. Hidden costs and high-interest loans
2. Diluted attention and resourcing
3. Selectivity and pressure to settle

The hidden costs of CFAs

The ‘no fee’ only refers to your lawyer’s fees. However, your case may generate a number of other expenses, known as disbursements. Your ATE insurance may cover these fees, but this is not always the case. Often, you’ll be required to pay these regardless of whether you win. Disbursements can include:

• Court filing fees
• Barristers fees
• Costs for external reports, like medical experts or surveyors
• Expenses for obtaining official reports like doctors records or police reports

These ‘hidden’ costs can accumulate to thousands of pounds, shifting a great deal of risk back onto you.

Crucially, in order to cover these costs, some firms will also offer special loans.

Tread carefully here, as in spite of their helpful appearance, these loans can create a real conflict of interest. These loans generally carry high interest rates that continue to accrue until the case is settled. Your solicitor becomes your creditor, and now has a financial interest in recovering loan interest, which might not always align with your best interests in resolving your matter.

Diluted attention and resourcing

The business model for many no win, no fee firms is based upon juggling a large volume of cases, so that the winners can offset the financial risk of any cases they lose. This factory-style approach to legal work inevitably leads to a poorer experience.

In particular, you might find:

• A lack of access to your solicitor. Your case may be handled primarily by junior paralegals or administrative staff.
• Poor Communication. With so many cases to juggle, communication can become slow. You may find having to chase repeatedly, or wait weeks for responses.
• Reduced strategic focus. If spread too thin, your lawyer cannot provide the personalised strategy your case may require, potentially leading to generic guidance or missed opportunities.

Selectivity and pressure to settle

As a client, your primary goal is to get the right outcome, as quickly and effortless as possible. Unfortunately, the financial incentives impacting your lawyer can establish two powerful pressures that will directly affect you: aggressive case selection and incentives for early settlement.

• Cherry-picking cases: Because the firm only gets paid on successful claims, they are incentivised to focus their attention only on those cases with the best chances of winning, and those with the least perceived effort to get to that win. Cases viewed as complex, borderline, or requiring a protracted battle are often rejected, even if they hold plenty of merit. Sadly, this relegates many valid claims no closer to accessing the representation they deserve.
• Pressure to settle for less: A quick settlement is more profitable for a firm than a long fight for a better award. Solicitors often to encourage their clients to accept early settlement offers. Sometimes these offer may be reasonable, but still don't represent the full expected value of your claim. This pressure ensures the firm gets a swift, guaranteed payment, to the detriment of their clients.

The ugly: where things go wrong with no win no fee arrangements

In the worst cases, no win, no fee arrangements can be viewed as exploitative, or outright harmful to clients:

• Claim farming
• Sudden, unexpected withdrawals
• Insurance disputes

Claim farming

Some lawyers pursue volume over quality to such a great extent they hire services to help them source clients. This is commonly known as claim farming in the industry.

Claims farmer [noun] - a middleman who encourages people to make compensation claims and who then sells these claims on to a lawyer (Collins Dictionary)

You’ve witnessed this if you've ever received a call inquiring if you’ve been involved in an accident, or received a flyer through your door inquiring after mould or damp in your property.

Prospective claimants are enticed by the promise of compensation requiring minimal effort. Fraud concerns arise here, when incidents can be fabricated, or exaggerated. Worse yet, claims are even occasionally made without the knowledge or consent of the claimant.

Sudden withdrawals

Solicitors sometimes back out, leaving their clients behind with consequences that weren't apparent when they signed up. Withdrawal is most often when cases become more complex than anticipated, or prospects of success diminish.

Only at this point, do people discover they're personally on the hook for costs already incurred. 

If the case has progressed, clients may also struggle to find alternative representation, this timing can be especially damaging if it occurs close to limitation deadlines or during active litigation.

Withdrawal from cases is also one-sided, as clients generally are not allowed to elect to withdraw their cases themselves.

Insurance disputes

Insurance generally requires a greater than 50% chance of success. This creates a tension: cases with borderline prospects are either rejected, or accepted based on overly optimistic projections.

Lawyers don't have the same incentives as the insurer, sometimes leading to cases being presented overly favourably. Exposing clients to financial risks down the road.

Even with the right insurance, financial risks still exist. Insurers can dispute coverage, particularly if they believe the case never met the 50% success threshold. Some solicitors shift this liability onto clients, claiming inadequate evidence or cooperation affected the case's prospects.

When such situations arise, clients need to pursue complaints through the Legal Ombudsman, a process that can take months. Even successful complaints may not fully restore clients' financial position, particularly when solicitors lack adequate professional indemnity insurance or have ceased trading.

There are plenty of horror stories online of these situations.

What is the future of no win, no fee arrangements?

The CJC has recently published a report on access to civil litigation, in particular fees and funding. They propose a range of progressive reforms, including replacing CFAs and DBAs with a single, simplified regulatory regime. Whilst moving in the right direction, they don't necessarily address the core misaligned incentive issue at play here.

The challenge is that you want a just outcome, protected from costs and risk, while your lawyer still needs to profit, typically by minimising their time or maximising their cut.

We believe the greatest opportunity for better client outcomes is via technology as a means to alleviate these tensions.

Task automation opens time for solicitors to dedicate more attention to each client. It lowers operational costs, and offers an alternative route to maintaining profitability, without the financial pressure that currently incentivises quick settlements or factory approaches to client experience.

Better yet, directly connecting clients to the right information and tools could eliminate solicitor involvement in straightforward disputes entirely. Self-service platforms for simple claims would remove both the costs and contractual complexities that characterise current no win no fee arrangements.

For either scenario, contract transparency is also a crucial area for improvement. Technology can help translate CFA agreements into plain English, flag potential risks, and explain your circumstances in a manner anyone could understand.

Our involvement

At Remedy, we are developing the platform to improve communication, access and transparency in legal services. For more advice and insights on what we are doing, follow our blog.

If you're currently seeking legal representation, please see our advice map for a range of support services around the UK, or contact us and we'd be happy to point you in the right direction.