Take care not to slip up on no-win no-fee banana skin

THERE’S no doubt about it: if you feel you have a legal claim against a third party for an accident or injury, then the offer of having your case pursued on a no-win no-fee basis is hugely enticing.

The appeal is obvious. The risk transfers to the legal firm taking your claim forward. A fee – if one is charged at all – will only be levied if you win. Should you lose, then you escape without paying a penny.

That’s the perception. Unfortunately, here in Scotland, it can be far from the reality. The stark truth is that clients who strike deals with their legal representatives on this basis can still end up with large bills.

In some cases they may even have to accept settlements which are far short of the sums they are reasonably due.

“You can go to a number of legal firms in Scotland and they will offer to take your case on a no-win no-fee basis,” says Fraser Oliver, partner and executive board member at Digby Brown, one of the country’s largest specialist personal injury practices.

“The problem is that in each case, what they mean by no-win no-fee will be completely different, and the customer will have no concept of that until they’re quite a long way down the line. They believe it’s a standard product but it’s not – they’re almost buying blind.”

Part of the problem, Oliver says, is that the no-win no-fee model is not regulated by the Law Society of Scotland – anybody can offer it without direct explanation or regulation.

“In general, it means ‘we won’t charge you unless you’re successful and you win your case’. But you have to ask what happens if you lose, or if the insurance company you’re claiming against says that it was your own fault, for instance, or that it’s an accident without liability.

“It may also simply refuse to deal with your case, or perhaps recommend acceptance of an offer which is a fraction of what it would be worth in terms of an award had it gone to court.”

Oliver explains that all legal firms taking on a case will accept that if they do so on your behalf and lose, then you won’t have to pay their fees. But this isn’t quite the same as a true no-win no-fee arrangement.

In some cases, they will agree to take on the legal work, but you will be expected to pay outlays such as medical reports as the case progresses, and these can be very expensive.

“They may also agree not to charge you, but will point out that if a court action is raised, it will potentially become much more expensive. If you then lose, there may be an award of the other party’s expenses against you, and you will have to cover that cost.”

There are even some situations where a firm simply seeks to obtain a quick and easy settlement from the other party’s insurance company, accepting a first offer without being prepared to pursue litigation or court action.

Oliver continues: “As things stand at the moment, most people think of no-win no-fee as a generic term. But it isn’t. There are no standard terms and conditions – it’s all down to whatever is in the small print of a particular legal firm or claims company trying to deal with your case.”

“Another issue is that if a case goes to court, the defender has the opportunity to make what is known as a tender offer in a sealed envelope. The court isn’t made aware of what the offer is.

“If the case runs to a conclusion and the pursuer is awarded the same as, or less, than the tender, then they will be deemed to have failed to accept a reasonable offer and they can then be liable for the expenses of the other side from when that tender was put in.

“These tenders can serve a useful purpose, but people do need to be aware that they can be used by insurance companies as a way of browbeating them into taking an unreasonable offer. You really do need good advice about what a reasonable offer is in the first place.”

The critical thing, Oliver says, is that anyone seeking to pursue an accident or injury claim under the no-win no-fee model must ask what will happen if they lose the case, or are offered a settlement figure which is a fraction of the true value of a potential award. They should receive a clear and unambigious answer.

Digby Brown’s own no-win, no-fee system operates in a novel way which offers the client a potential of winning a full award at no personal risk. Digby Brown’s own arms-length litigation funding company, Compensate, pays for an insurance policy so that if the claim is ultimately unsuccessful, the client still pays nothing. The policy underwrites all expenses and outlays incurred in the case.

Only if the client wins is a fee levied, and this is normally a capped charge based on a percentage of the total award.