Why is this service not available on "No win, No fee" contracts?

"No win, No fee" agreements, or Conditional Fee Agreements, are available for many different types of legal work which involve dispute resolution ("contentious") work, such as injury and commercial claims. The intention of these agreements, is that, as your solicitor will be paid by the losing party if you win, they agree to work for free if you lose. Obviously your solicitor runs a business and if they are not profitable that business will not survive. The only way this  system is profitable for your solicitor is if they charge a "success fee" on the cases that they win. This ensures that, provided they do not take on too many borderline cases, the winning cases pay for the losing cases and leave a profit.

The foundation of these agreements is the fact that legal costs can be recovered from the losing party, in addition to your compensation.

The Small Claims procedure however is different. Solicitors were never intended to be involved. The procedure was designed as a system for private citizens to resolve their own disputes by an informal "arbitration" process before a Judge. In fact, up to 1990, the Small Claims process was called "Arbitration". Claimants were intentionally unable to recover their solicitors' costs and that remains the position today.

This would be all very well but for two important points. Up to 1st April 2013, the Small Claims limit was £5,000. £5,000 is a lot of money to lose, but that figure was doubled on 1st April 2013 to £10,000. The point is that up to 1st April 2013, money claims with a value of £5,001 and above were considered serious enough that they were not dealt with in the Small Claims Court. You could pursue your claim for money over £5,000, and, importantly, you could also recover the legal fees of the solicitor who ran the case for you. Now, that limit is £10,000, which means that people with large losses between £5,000 and £10,000 have to run their cases themselves, as there is little point in paying a solicitor on an hourly rate to recover a fixed sum of money, if you cannot then recover those legal costs if you win. The longer the case goes on, the more uneconomical it is to run.  

The second important point is that, if as a consumer you take legal action against a business or an insurer, they will usually use solicitors to defend your claim, even if they cannot recover their legal costs from you if you lose (and they win). There are two reasons for this, the first of which is that large businesses and insurers often have access to cheap legal representation, often at agreed low fixed fees. This is available to them because they can provide work in volume which makes it affordable for the solicitor to take on. The second reason is that it is cost effective for them to fight your case. If they lose, they end up paying you, plus (often a low fixed fee to) their solicitors. If you lose and they win however, they avoid the larger outlay of paying you your compensation, so their gamble has paid off, even if they cannot recover their legal costs of defeating your claim.

For this reason, if you make a Small Claim against a business or insurer, you are likely to be acting alone against their legal advisors. You cannot use a "No win, No fee" agreement to  pay for the assistance of a solicitor, because a solicitor cannot recover their legal costs if you win.

There may be firms who do offer debt recovery work on a "No win, No fee" basis. Given that they are unable to legally recover their fees in the Small Claims Court from your opponent, there is only one commercially viable way that they can do this, and that is to ensure that, on the cases they win, you must pay them significantly more than you would have to, had they charged you a fixed fee up front. In other words, in exchange for sharing the risk of not being paid if you lose, they ask you to agree to give them a share of your compensation if you win. Some clients are happy to enter into such agreements to avoid up-front costs, but I do not use such agreements, because:

• I do not agree that it is fair to take a share of someone's recovered debt;
• I do not agree that it is fair to charge fees which are disproportionate to the work done, back-end, up-front, or otherwise;
• Finally, I do not agree with the approach adopted by many organisations of hiding their fee structure. My fees are transparent, and are online for all to see.
  

In order to avoid the very unwelcome situation of having won your case, and then having to pay a large proportion of your compensation to your solicitor for your legal costs, your only option is to get the best legal help  that you can on a Low Fixed Fee.