No Win No Fee Agreements Explained: How They Really Work
No win no fee means your solicitor is paid only if you win, usually through a success fee taken from your compensation and capped at 25 per cent in injury claims. Expenses and insurance are extra, and you can be charged if you pull out.
Key points
- A conditional fee agreement adds a success fee of up to 100 per cent to the solicitor's normal costs; a damages-based agreement takes a fixed share of what you recover.
- In personal injury and clinical negligence the success fee cannot exceed 25 per cent of your general damages and past losses; future losses are protected.
- Damages-based agreement fees are capped, including VAT, at 25 per cent in injury claims, 35 per cent in employment cases and 50 per cent elsewhere.
- No fee does not mean no cost: expert reports, court fees and an after-the-event insurance premium are extra, and ending the agreement early can trigger a bill.
- No win no fee is used for injury, negligence, employment and some housing and commercial claims; it is cannot be used in criminal or family proceedings.
- Cold calls about claims are banned and referral fees in injury cases are illegal, so an unsolicited approach is a reason to walk away.
No win no fee means your solicitor agrees not to charge you their fees if your claim fails, and in return takes a success fee from your compensation if it succeeds. In England and Wales the agreement is either a conditional fee agreement, where the success fee is an uplift on the solicitor's normal charges, or a damages-based agreement, where the fee is a fixed percentage of what you recover. Both are capped by law: in a personal injury case no more than 25 per cent of your general damages and past losses can be taken. The phrase hides several costs that are not fees, including expert reports, court fees and an insurance premium, and most agreements let the firm charge you if you pull out or break the terms. This guide explains how the two types of agreement work, what you actually keep, where no win no fee is available and the questions to ask before you sign.
Two kinds of agreement
A conditional fee agreement (CFA) is governed by section 58 of the Courts and Legal Services Act 1990 and the Conditional Fee Agreements Order 2013. Your solicitor records their time at an hourly rate as usual, but you pay only if you win. If you win, the losing side pays most of those basic costs, and the solicitor charges a success fee of up to 100 per cent of the basic costs as the reward for taking the risk. Since 1 April 2013, when Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 came into force, the success fee can no longer be recovered from the loser: it comes out of your damages.
A damages-based agreement (DBA) under section 58AA of the same Act and the Damages-Based Agreements Regulations 2013 is simpler: the solicitor's fee is a percentage of the money you recover, whatever the hours spent. Any costs recovered from the other side are credited against that percentage, so you pay only the shortfall. DBAs are common in employment tribunal claims, where each side normally bears its own costs, and in some commercial disputes.
Neither type can be used for criminal or family proceedings, which the Act excludes, and no win no fee is rarely offered for transactional work such as conveyancing, wills or immigration applications, where there is no opponent to pay costs.
The success fee and the statutory caps
For a CFA in a personal injury or clinical negligence claim, the success fee is capped at 25 per cent of two heads of damages: general damages for pain, suffering and loss of amenity, and past financial losses, after deducting any benefits repayable to the state. Future losses such as lifelong care or lost pension are untouchable. The cap applies to claims settled or decided at first instance; appeals are treated separately. The Order does not say whether the 25 per cent includes VAT, so ask: many firms apply it inclusive, but the agreement governs.
DBA caps are set by the regulations and expressly include VAT: 25 per cent of the same damages heads in personal injury claims, 35 per cent of the award in employment tribunal matters, and 50 per cent of sums recovered in other civil claims. A DBA that breaches the regulations is unenforceable, which has made solicitors cautious about using them outside employment.
An illustration helps. Suppose a personal injury claim settles for £20,000, made up of £12,000 for the injury, £3,000 of lost earnings and £5,000 for future treatment. The cap is 25 per cent of £15,000, so at most £3,750 can be deducted, and the £5,000 of future loss is protected. If the solicitor's basic costs of £8,000 are paid by the insurer and the agreement sets a 100 per cent success fee, the fee would be £8,000 on paper but is limited to £3,750 by the cap. The figures are invented for the example; the point is that the cap, not the percentage in the agreement, usually decides what you pay.
Insurance and what "no fee" does not cover
Disbursements are the costs of running a case that are not the solicitor's own fees: court issue fees, medical and other expert reports, barristers' fees, records and travel. A no win no fee agreement covers the solicitor's fees; it does not automatically cover disbursements, which can run to thousands of pounds in a clinical negligence claim. Most firms therefore arrange after-the-event (ATE) insurance when you sign. The policy pays your disbursements, and in some cases the other side's costs, if the claim fails. Its premium is usually deferred and self-insured: you pay nothing if you lose, and the premium is deducted from your damages if you win. Since April 2013 the premium cannot be recovered from the defendant, with one exception for the part of a clinical negligence policy that covers expert reports on breach of duty and causation.
In personal injury claims, qualified one-way costs shifting (QOCS) under Part 44 of the Civil Procedure Rules means a losing claimant does not normally pay the defendant's costs. The protection falls away if the claim is found to be fundamentally dishonest or is struck out, and since 6 April 2023 a defendant's costs order can be set off against both your damages and any costs you are awarded, which bites where you reject a Part 36 offer and fail to beat it. Outside personal injury there is no such shield: in a commercial or housing dispute run on a CFA, losing can mean paying the other side's costs, and ATE cover is correspondingly more important.
The agreement also sets out when you can be charged despite losing or settling. Typical terms allow the firm to bill its basic costs and disbursements if you end the agreement early, reject its advice to accept a reasonable offer, fail to co-operate, give misleading instructions or move to another solicitor. If you sign at home, online or anywhere other than the firm's premises, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 give you 14 days to cancel, and a firm that failed to tell you about that right may be unable to charge you at all.
How much you actually keep
Three deductions typically come off a personal injury award: the success fee, the ATE premium, and any basic costs the insurer refused to pay that the agreement allows the firm to recover from you, known as the shortfall. The first is capped; the second and third are not, so ask for all three in a written worked example before signing. Some firms promise to cap total deductions at a stated percentage, which is worth more than a low headline success fee.
In employment claims under a DBA you keep at least 65 per cent of the award, and no tribunal fees are currently payable. In financial mis-selling claims, such as motor finance commission or packaged bank account complaints, the Financial Conduct Authority has capped claims management fees since 1 March 2022 on a sliding scale: 30 per cent of redress up to £1,499 (maximum £420), 28 per cent up to £9,999 (maximum £2,500), 25 per cent up to £24,999 (maximum £5,000), 20 per cent up to £49,999 (maximum £7,500) and 15 per cent from £50,000 (maximum £10,000). Payment protection insurance claims have a separate statutory cap of 20 per cent. Since 26 July 2024 the Solicitors Regulation Authority has applied the same caps to solicitors doing this work, so a law firm cannot charge more than a claims company.
Where no win no fee is used, and where it is not
Conditional fee agreements dominate personal injury and clinical negligence; the guides to personal injury claim time limits and how to make a medical negligence claim explain those processes. Employment tribunal claims for unfair dismissal and discrimination are commonly run on DBAs or CFAs, as described in the guide to the employment tribunal process, although employment law solicitors also offer fixed fees for settlement agreements, which the employer usually pays for. Housing disrepair, professional negligence, some data breach and group actions, and a minority of commercial disputes with a clear payer at the end are also funded this way; business law solicitors will usually want a strong case and a solvent opponent before agreeing one.
No win no fee is not available for criminal defence, where legal aid and fixed fees apply, or for divorce and family cases, where such agreements are prohibited. It is rarely offered to defendants, to claimants in small claims (because costs cannot be recovered) or for debt recovery of small sums. If no firm will take your case on this basis, that is usually a signal about its prospects or value; the guides to how much solicitors charge and free legal help cover the alternatives, including legal expenses insurance and trade union schemes that may fund a claim without any deduction.
Questions to ask and warning signs before you sign
Get written answers to these questions before signing:
- What is the success fee percentage, which damages does the cap apply to, and does the figure include VAT?
- Will there be an ATE premium, roughly how much, and when is it payable?
- Who pays disbursements if the claim fails, and are any payable up front?
- What happens if you end the agreement, change solicitor or reject advice to settle?
- If a Part 36 offer is refused and not beaten at trial, what would you be liable for?
- Who will run the case day to day, and is the firm regulated by the Solicitors Regulation Authority, whose register you can check, or is it a claims management company regulated by the Financial Conduct Authority?
- Do you already have cover through legal expenses insurance on a home or motor policy, or a trade union?
Warning signs include unsolicited calls, texts or doorstep visits, which are banned for claims unless you consented; pressure to sign on the day; promises of a guaranteed result; requests for an upfront administration fee; a company that will not say which firm will actually conduct the claim; and paperwork that signs you up both to a claims company's percentage and to a separate solicitor's agreement. Referral fees for personal injury cases have been unlawful since 2013, and solicitors may not cold call members of the public. A reputable firm will send the draft agreement, explain it and give you time to decide. You can compare personal injury solicitors in Newcastle upon Tyne, employment law solicitors in Sheffield or any area through the solicitors near me search; if something goes wrong later, how to complain about a solicitor explains the Legal Ombudsman route.
Frequently asked questions
Is no win no fee really free if I lose?
Your solicitor's own fees are written off, but that is all the phrase guarantees. Expert reports, court fees and barristers' fees still have to be paid by someone, which is why firms arrange after-the-event insurance with a premium that is only charged if you win. In a personal injury claim qualified one-way costs shifting normally stops the defendant recovering its costs from you. Outside injury claims, or if the court finds the claim dishonest, you could face the other side's costs.
How much of my compensation will the solicitor take?
In an injury or clinical negligence claim the success fee is limited to 25 per cent of your general damages and past financial losses, and nothing can be taken from future losses. On top of that you pay the insurance premium and any shortfall in costs the agreement allows, so deductions of 25 to 35 per cent of the injury and past-loss element are common. Under a damages-based agreement the fee is a straight percentage capped at 25, 35 or 50 per cent depending on the type of case.
Can I cancel a no win no fee agreement?
Yes, but read the terms first. If you signed away from the firm's offices, including online or by post, you have 14 days to cancel without charge under the Consumer Contracts Regulations 2013. After that, most agreements allow the firm to charge its basic costs and disbursements if you end it without good reason or move to another solicitor, though the bill is often only payable at the end of the claim. If the firm wants to end the agreement because the case has weakened, you normally pay nothing.
What is the difference between a solicitor and a claims management company?
A claims management company is regulated by the Financial Conduct Authority and may gather your details, assess the claim and pass it to a law firm, often taking a share of the fee. It cannot conduct court proceedings. A solicitor is regulated by the Solicitors Regulation Authority, carries compulsory insurance, holds your money in a protected client account and gives you access to the Legal Ombudsman and the SRA Compensation Fund. You can instruct a solicitor directly and skip the middleman.
Why has no solicitor agreed to take my case on no win no fee?
Firms take the financial risk, so they decline cases where liability is unclear, the evidence is thin, the value is too low to justify the work, the opponent may be unable to pay, or the claim falls on the small claims track where costs cannot be recovered. A refusal does not mean you have no case. Ask why, get a second opinion from a specialist, and consider legal expenses insurance, a trade union, a fixed fee or running a small claim yourself.
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This guide describes the law in England and Wales as at 30 October 2026. It is general information, not legal advice about your situation; the law and the figures it quotes change, so check the position with a solicitor before acting. LawFirms.co.uk is a directory and does not provide legal services.