‘No win no fee’ lawyers forced to pay £1 million in compensation

Dodgy 'no win no fee' legal firms were made to pay £1 million to claimants in 2013.

Lawyers offering shoddy ‘no win no fee’ legal services were ordered by the Legal Ombudsman to pay out £1 million in compensation last year.

It slammed these firms for providing misleading information and sending out incorrect bills of thousands of pounds to clients.

In the past year more than 600 complaints were received by the Legal Ombudsman, leading to its call for the term ‘no win no fee’ to be scrapped.

'No win no fee' failures

Chief Ombudsman Adam Sampson said this "increasingly aggressive" market has led to many companies prioritising the volume of customers they have, rather than the quality of the service they provide.

'No win no fee’ legal services are known as conditional fee agreements (CFAs) and are used on the basis that if the claim fails the lawyer will not be paid a fee. If the claim is successful the lawyer will charge a base cost and a success fee.

CFAs can be used for a variety of different cases, but are often associated with car accidents or personal injury cases.

They were supposed to make legal services risk free but the Ombudsman says they are leaving some customers facing thousands of pounds worth of unexpected costs. This model has also contributed to the culture of ambulance chasing and fraudulent claims, which has pushed up insurance premiums for everyone. Read Have you been a victim of 'flash for cash'?

The Ombudsman says there is a fundamental weakness in these services which need to be phased out.

In one case a claimant was charged £24,000 after successfully winning his case, although the law firm he used pulled out halfway through which meant he had to represent himself.

One of the main problems is that terms and conditions in ‘no win no fee’ agreements are often not explained properly. Lawyers can often exploit loopholes in how these agreements are written to reduce their own financial risks.

The Advertising Standards Agency (ASA) has previously issued warnings about these services. It accused lawyers of being misleading and not informing clients about costs. In some cases, for example, clients are not told they may have to pay out for insurance costs, even if they lose a case.

“A business model which consistently overvalues the chances of success can drive lawyers into unethical practice in order to avoid financial meltdown. This report raises genuine questions as to whether the ‘no win, no fee’ label should be used at all,” Sampson concluded.

In total lawyers in these cases were ordered to pay back £944,177 between 1st November 2012 and 1st November 2013.

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How to complain

If you’ve used a ‘no win no fee’ legal company and believe you’ve been wrongly charged for something, you can complain and ask for compensation.

In the first instance you’ll need to go straight to the lawyer in question and give it eight weeks to respond. If by this time it hasn’t replied, or you’re not happy with the response, you can take your complaint to the Legal Ombudsman.

Complaint forms can be downloaded from the website and emailed or posted in.

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