In this article we explain how no win no fee cases work in the employment tribunal and courts and why legal fees for your case take so much of your tribunal compensation or settlement. It’s written by actual no win, no fee employment lawyers in Solihull, who deal with these cases every day.
Lawyers need to be paid for their work. It takes years of study, expensive legal database subscriptions and a marketing budget to find clients and this has to be paid for. We’ll assume that you can’t find a pro bono lawyer (someone who will work for nothing), though you might find a charitable organisation that gives legal advice and help. We have taken cases on a pro bono basis in our early careers, especially if they are interesting.
But that is very rare. The usual ways of funding a legal case are
- Pay as you go (on an hourly rate)
- Fixed fee (say £750 to issue a claim)
Legal aidthis is no longer available in employment cases
- Legal expenses insurance (many home policies have this as a hidden add-on)
- No-win, no-fee
The two types of no win, no-fee arrangement
There are two types of no win, no fee arrangements. One is called CFA and the other is called DBA.
You see CFAs (‘conditional fee agreements’) in court systems where the loser pays the winner’s legal costs. It is a deal where the lawyer says “I’ll charge you nothing if you lose, and if you win I’ll charge you extra but the other side will pay“. Your compensation is untouched. The law says that the fees can be no more than 2x what the lawyer would have charged ordinarily.
DBAs (‘damages-based agreements’) are used in tribunals, where the winning party doesn’t get their legal costs paid by the loser. It is an agreement where the lawyer says “I’ll charge you nothing if you lose and if you win I’ll charge you extra, which you will pay for (out of your award or settlement)“. The law says that the fees can be no more than 33% of the compensation recovered. Expenses such as employment tribunal fees are on top of this.
Will you take my case on a no-win, no-fee basis? Why do you take such a large chunk of my compensation?
This article concentrates on the employment tribunal process since we are employment tribunal lawyers.
Tribunal cases can be a risky business
If your case is complex, it will take more legal hours to deal with but as a rough guide, a case consists of the following elements:
Starting out – 1 to 2 hours
- Initial meeting, deal with ID documents, contact details, discuss funding, agree terms and conditions, take initial instructions.
- Think about employment tribunal case strategy including evidence, witnesses.
Getting the claim underway – 3 to 10 hours
- Take details needed to draft the claim. Draft it, refine it, check it and lodge it.
- When the tribunal claim response comes in, get the client’s instructions on it, consider the impact on case strategy and note them down for later.
Prepare for and attend a preliminary hearing – 1-2 hours to prepare, 1 hour to attend, 1 hour travel
- The judge will want to meet the parties to check they agree on the legal issues and facts that need to be known (experience shows that this prevents time-wasting at trial) and agree on a timetable for the next steps of the case.
Exchange documents – 5-20 hours
- Gathering the relevant documents from the client, reading them, putting them in a good order, indexing them, considering them against the case strategy.
- Receiving the other side’s documents, reading them, discussing them with the client, working out what the other side have not handed over, and considering them against the case strategy.
- Create a master list out of all these documents for use by the judge, agreeing it with the other side and indexing that.
Witness statements – 10-20 hours
- This is the important and time-consuming step. We sit down with the client and put their story down, in detail, onto paper in a form which fits in with the case strategy, addresses and doesn’t conflict with the documents and the way we have presented our case so far. This document may end up being 20 pages long or more.
The hearing – 10-20 hours to prepare, 10 hours to travel / attend
- Prepare a list of the legal and factual issues
- In a more complex case, a chronology and cast list
- Prepare cross-examination questions
- Prepare final submissions
- Attend the hearing
Other – 10 hours
- Writing to other side, witnesses, Acas, the tribunal and expert witnesses
- Negotiating, drafting settlement agreement, going to mediation
- Applying to the tribunal because other side are not complying with orders
- Hearing stretches to another day
The above time estimates are probably good for 80% of cases and cover cases of one to a few days. if the lawyer’s rate is £120 to £200 per hour, the estimates for dealing with a case like that would range from £7,000 to £21,000.
Average employment tribunal awards depend on the type of case and the specific details of it but a typical award might be from £5,000 to £20,000. You can see that it is a challenge for a lawyer to do a case on a no-win, no-fee basis if they can only take on cases where the expected compensation is 3x the estimated cost of handling the case to its conclusion, which puts pressure on the employee and lawyer to get an early settlement. It is important for the employer not to know that you are funding your case on a no-win, no-fee basis or they might exploit this.
Nevertheless, employment tribunal lawyers do what we can for clients on no-win, no-fee cases. We reduce our fees expectation or find ways of reducing the overhead, take off the gold-plating, including getting the other side to do more work, leaving some work until the last minute, re-using documents, having fewer meetings and keeping communications to a minimum. Again, if the the employer knows that you are funding your case on a no-win, no-fee basis they might exploit this by causing needless hearings, refusing to share the preparation work fairly and so on.
If the case settles early, the lawyer gets up to 35% of the settlement and may have done not much work for it. But that pays for the cases that go all the way to a trial but lose, through no fault of the lawyer.
Things to watch for
Check that the lawyer is offering you the right cut in the no-win, no-fee deal. Many will take the permitted maximum for every employment tribunal case, even an open and shut case. Well, our experience is that there’s no such thing as an open and shut case, but the principle is that a weaker case or a smaller case should result in a higher percentage for the lawyer. This is because every case can require thousands of pounds in work to get ship-shape, regardless of how good it is or what its value may be. We won’t do the maths here, but the percentage should be linked to the risk of losing, so that the cases that win pay for the cases that don’t.
As it is in the interests of the lawyer to secure an early settlement (a cut of the compensation for not much work) you want to be sure that the deal is good for you as well as for them. A professional would not consciously take an offer that was too low, just to avoid the risk of an expensive case they might lose but it might happen subconsciously. So ensure they tell you the risks of the case and the likely outcomes and compensation in detail. We might give a client something like this diagram for example (click to enlarge) to explain why their case is a 50%-50% one:
If, with this example case, you can reasonably expect a tribunal settlement or award of £10,000 then, because you have a 50% chance of winning at the end, you might accept a settlement of 50% in the early stages. But if you have one the first (70%) hurdle at a preliminary hearing then your chance of winning at that point is 90% x 80% = 72% so if your lawyer is recommending you accept a settlement of 60% at the doors of the tribunal they need to explain this.
Another thing to watch for on a no-win, no-fee case is the lawyer who gives you a rock-bottom service, putting no work into the case, hoping that the other side will want to settle at the doors of the court. This kind of practice leaves you with a weaker case because the lawyer has not:
- Tried to improve your case tactically while you were at work
- Insisted on getting the right documents and witnesses together until it’s too late
- Been there for you when you needed them on the phone and by email because he would rather do work for clients who pay as they go.
Finally, try to anticipate costs that may not have been mentioned such as if don’t go according to plan:
- What if I refuse an offer that you want to accept and I don’t?
- What if we fall out for another reason? Does it matter who is to blame?
- What about expenses such as travel, tribunal fees, postage? How much will they be? Who pays them?
- Is there extra cost for hearings or is that within our no win, no fee arrangement?
If this article hasn’t answered all your questions, drop us a line!