Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.


"No Win, No Fee" commonly refers to schemes which allow lawyers to enter into conditional fee arrangements with their clients. The phrase is potentially misleading, however, because it can imply that the client will be liable for no costs whatsoever. In fact, under such schemes, the client could be liable for one or more of: disbursements, indemnity insurance or the other side’s legal costs in the event of a lost case.

The regulatory framework
Ensure that the initial commitment is genuinely free
State details of the fee payable
 

The regulatory framework

Since April 2007, claims management firms have been regulated by the Ministry of Justice (MOJ) under the Compensation Act 2006. The Act provides the statutory framework for the regulation of claims management activities. The MOJ has published the Marketing and Advertising Guidance Note, which provides guidance to authorised businesses on the Rules and other legal requirements.

On 1 April 2019 the Financial Conduct Authority (FCA) will take over from the MOJ and become the regulator of claims management companies (CMCs). Further information about what firms may be required to do in preparation for FCA regulation is available on their website.

Ensure that the initial commitment is genuinely free

If they use the claim "No Win, No Fee" or similar, marketers should ensure that the initial commitment is genuinely without cost (Claims Direct, July 2000 and Savas & Savage Solicitors, 9 June 2004). Marketers who require payment for their services may still use the claim "No Win, No Fee" provided they explain the client’s liability for certain costs. This information, for example "Subject to insurance. Other costs are be payable", may appear in a footnote if it is asterisked to the “No Win, No Fee” claim. Clients may be charged by marketers or any firm to whom their claim is referred. The marketer should ensure that all such potential charges are taken into account when indicating costs to their client. More information and a list of suitable qualifying statements can be found in the CAP Help Note on “No Win, No Fee” Claims.

State details of the fee payable

Marketers who offer a "No Win, No Fee" service may need to state details of the fee payable if a case is successful in some circumstances. The ASA held that a success fee of 39% should have been prominently stated in an ad for a claims management company, because the omission of that information in an ad which referred to a "no win no fee" service was likely to materially mislead consumers  (Waxon Waxoff Management Ltd t/a Premier Bank Claim, 24 May 2017).  In determining whether it is necessary to clearly state such a fee in ads, marketers should consider whether the fee is of an amount that is likely to impact on a consumer's transactional decision on whether or not to proceed with the process.  The ad should not mislead in other ways and should not, for example, encourage frivolous or spurious claims (See Litigation: Specious claims).

See Litigation: Claims Management.


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