Conditional fee agreements sound straightforward, and they mostly are. But there are details that matter when your case concludes. Here is what you should understand before you sign.
Conditional fee agreements (commonly called no win, no fee) have existed in England and Wales since 1995. They were introduced to give ordinary people access to personal injury litigation without the risk of ruinous legal costs. For the most part, they do exactly that. But there is enough misunderstanding about how they work that it is worth explaining the mechanics clearly.
The Basic Structure
Under a conditional fee agreement (CFA), your solicitor agrees to be paid only if your case succeeds. If it does not succeed, you pay nothing for the solicitor's work. If it does succeed, the solicitor receives their normal fee plus a success fee, an uplift to reflect the risk they took by acting under a CFA.
The success fee is capped by law at 25% of your compensation in personal injury cases (excluding future loss of earnings and future care costs, which cannot be touched). This means that in a straightforward road traffic accident claim resulting in a £20,000 settlement, the maximum success fee deducted from your award is £5,000.
What 'No Fee' Actually Covers
The no-fee promise applies to the solicitor's time costs. It does not automatically cover disbursements, meaning the expenses incurred in running the case. These include medical reports, expert fees, court filing fees, and the cost of obtaining medical records. In most cases, these disbursements are funded through an After the Event (ATE) insurance policy that the solicitor arranges at the start of the case.
ATE insurance covers disbursements and the defendant's legal costs if you lose. The premium for this insurance is itself deducted from your compensation on a successful outcome, though only from a percentage of your general damages (pain and suffering), not your financial losses.
The Key Question to Ask
Before signing a CFA, ask your solicitor to walk you through the exact deductions that will be made from your award if you succeed. You are entitled to know this upfront, and a good solicitor will tell you without being asked.
When Cases Settle vs Go to Trial
The vast majority of personal injury claims settle without a trial. Insurers generally have little appetite for the costs and unpredictability of litigation, particularly where liability is clear. The practical effect of a well-run CFA claim is that the defendant's insurer pays the claimant's legal costs as part of the settlement, meaning your solicitor's fee comes from the other side, not from your compensation.
Where cases do go to trial and succeed, the court will typically order the defendant to pay the claimant's reasonable legal costs. The success fee and ATE premium, however, are not recoverable from the other side under current rules; they come from the claimant's damages. This is why the 25% cap matters.
The Cases That Should Not Be Taken On
A reputable firm running a genuine CFA will only take cases where there is a reasonable prospect of success, typically assessed at better than 50%. The firm bears the financial risk of a lost case, which creates a natural incentive to assess claims carefully. Be cautious of firms that appear to accept every claim regardless of its merits: the economics simply do not support it, and you may find your case is not properly resourced.
At Vantage Law, we provide an honest assessment of your claim's strength before we agree to act. If we do not think your case is strong enough to run under a CFA, we will tell you why.