Kate has over eight years of experience as an employment and personal injury legal executive. She runs LawCat, a legal explanations website.
When you bring a claim some of your earliest questions are going to be, “How do I pay for this?” “Can I get legal aid?” “What is no win, no fee?”.
Funding a claim is a common concern, especially if you have just lost or left your employment and money is a bit tight until you can secure new employment.
This article attempts to reassure and explain exactly what your funding options are so that you are in a position to further investigate which option you believe will work best for you. The article will also cover in some detail the most common method of funding an employment claim, no win, no fee agreements.
There are limited ways to fund an employment claim, Legal Aid is fast becoming a thing of the past and is no longer available for employment claims. So this leaves either Union Funding, Insurance Funding, Private Funding or No Win No Fee Funding
- Union funding is when you are a member of your works union and they review your potential claim and agree to run it on your behalf. The fact that you are a member of the Union means that usually, you will not have to pay for their advice and assistance. Although this can vary from Union to Union, so always read the small print first and ask questions when you are uncertain of any points.
- Insurance funding is when you have coverage for legal claims on an insurance policy such as car or home insurance. However legal cover will only cover certain types of claim, you should read your insurance documents very carefully and if in doubt as to whether or not you are covered ask your insurance company directly.
- Private funding is self-explanatory, it is when you fund a claim yourself out of your own pocket. You employ a legal professional to run the claim and pay them their hourly rate win or lose the claim. This is perhaps the most expensive way to peruse a claim.
- A no win, no fee agreement is when you sign what is known as a conditional fee agreement with a firm of solicitors. A conditional fee agreement means that you will not pay legal fees if you lose and if you win you will pay a percentage of your compensation to your solicitor to cover the legal fees. Make sure you read these agreements carefully and as always if you have any questions ask your solicitor.
The remainder of this article will focus on no win, no fee agreements, as these types of agreements are the most common when it comes to funding an employment claim.
What is No Win, No Fee?
No win, no fee agreements (official legal name: Contingency Fee Agreements, not to be confused with Conditional Fee Agreements) are also known as damage-based agreements.
In a nutshell these are agreements or contracts that you sign with a legal professional, employing them to run your claim for you and advise you on the best course of action which you will then instruct them on following or not following as the case may be.
No win, no fee agreements are unique in the sense that if your claim is unsuccessful you will not have to pay any legal fees.
However, this does not mean that you will pay nothing!
If your solicitor agrees to represent you under a no win, no fee agreement, then while you will not pay legal fees if you lose you will have to pay legal costs if you are successful. Your solicitor will be able to claim a percentage of your award as payment to them to cover litigation expenses.
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In employment claims the highest percentage a firm can take is capped at 35%. However, you can negotiate with your solicitor before signing the agreement to see if they will lower the percentage, it is unlikely that many firms will agree to this but some will and it never hurts to ask.
Can You Ask Questions?
What Happens If You Lose Your Case
If you have signed a no win, no fee agreement and your case is unsuccessful at tribunal then you will not pay any of your solicitor's legal costs. So you will not pay for any of the work done on your claim by your solicitor, however, you may still have to pay the disbursements, if there were any.
- Definition of Disbursements: Items or services that the solicitor has had to purchase to advance your claim e.g., your medical records to prove that you were suffering an illness which affected your employment etc.
A lot of legal firms will protect you against paying disbursements. They will do this in the form of an insurance policy which they will, with your agreement, take out on your behalf. Insurance, if in place, will cover the disbursements for you if you are unsuccessful. If the policy is self-insuring then they will also cover the cost of the premium, so at the end of the day, you will pay nothing if you lose.
What Happens If You Win Your Case
If you have signed a no win, no fee agreement with your solicitor and you win your claim, then you will become liable for some of the legal costs. You will only be expected to pay your fees if you win. But this will be limited to the percentage agreed at the outset, and by law cannot be more than 35%.
So, if you agreed a 35% fee and win £10,000.00 in compensation, you will pay £3,500.00 to your solicitor to cover the legal fees.
If you were reasonably savvy and managed to negotiate with your solicitor to lower their percentage, this is where you will reap the benefits. You will be able to keep more of your compensation.
In conclusion, there are multiple funding options available when bringing a claim, and it is up to you to decide which one you think will work best for your claim. You can use your union if you are a member, you may have insurance which will cover legal claims, or you could privately fund your claim yourself. However, the most common type of funding is a no win, no fee agreement with a solicitor.
No win, no fee agreement lives up to its name, you will not pay legal fees if you do not win. However, you may be liable for disbursements. If you are successful, you will pay a portion of your compensation to cover legal fees.
© 2018 Katie