The obligation of a client to pay costs and disbursements to a lawyer is required to be agreed upon and set out in a Costs Agreement.
The Costs Agreement will deal with issues such as the hourly charge rate of the lawyers, when payment is to be made, the estimate of the total fees that are likely to be incurred and the types of disbursements that will also be charged.
A “no-win, no-fee” agreement relieves a client from paying legal fees unless and claim is successfully concluded. That is to say if the case is lost or does not end in a successful outcome, then the client is not required to pay the solicitor’s costs.
A successful outcome will be defined in the Costs Agreement, but usually refers to a settlement involving a financial benefit to the client or a judgment in favour of the client.
“No-win, no-fee” agreements are looked at favourably by many clients because not only does the agreement have the effect of reducing the client’s liability to pay legal costs, but will also instil in the client a confidence that the solicitor believes that the claim is likely to succeed. After all, why would a solicitor be wasting time and money in pursuing litigation if the claim was not likely to be won?
Party/Party Legal Costs
Ordinarily, the court will order that an unsuccessful litigant pay the successful litigant’s costs of a court case. Those costs are usually required to be paid on a party/party basis.
As a rule of thumb, party/party costs cover about two-thirds of the total amount of costs that have been incurred.
It is important to understand that a “no-win, no-fee” agreement does not operate to remove the client’s liability to pay an opponent’s legal costs if the claim is lost.
As with all Costs Agreements, it is important that you properly understand the “no-win, no-fee” Costs Agreement before the lawyer starts work. Whilst “no-win, no-fee” Costs Agreements are significantly more attractive than most Costs Agreements, there can be issues that you will need to discuss with your lawyer.