We are often contacted by people who are surprised to learn that in practice legal aid is not available for unfair dismissal or other employment tribunal claims and that the successful client still has to pay their own legal costs.
The most common form of funding in the employment tribunal cases which we deal with is the so called ‘no win no fee’ agreement.
If you do not have legal expenses insurance and are not a member of an organisation such as a trade union which might fund your case then you are left with two main options if you intend to make a claim in the employment tribunal.
The first is to deal with the case yourself. No doubt many people do this successfully but the law and procedure are complex and it is common to feel the need for professional help.
It is likely then that you will look for a no win no fee agreement to avoid the risk of losing your claim and still having a bill to pay There is a third option which is to pay costs on a private fee paying basis. In some cases this is the best choice for funding but in most circumstances it would prove far too expensive which is why no win no fee is so commonly the preferred option.
Regulations limit the solicitor’s fee to 35% (including VAT) of any sums which the claimant receives. Though there is nothing to stop a smaller fee being charged- in almost all cases it will be the maximum. The term ‘no win no fee’ in practice is true but in a technical way it is not quite correct. If the claim is not won there is still a 35% fee- 35% of nothing.
The same fee applies whether the claim is won at a full tribunal hearing or whether agreement is reached on settlement at any stage.
At first sight it might appear unfair that the same percentage is charged regardless of the strength of the case, regardless of its value and regardless of whether (as rarely happens) it is settled right at the very beginning or after two lengthy hearings (one to decide upon responsibility and one to decide upon value). There are two main reasons for this.
Firstly the reality is that the only way the system works is for good cases of relatively high value to subsidise the time spent reviewing potential cases and the inevitable proportion that do not go smoothly.
The second reason is that all cases are risky. The case is taken on and the fee is set before all the facts are known and before all the documents are seen. Few if any claims have an outcome which is clear from the beginning. Sometimes claims are successful but the sum awarded is small- it is even possible to ‘win’ but to be awarded no money at all- though this is most unusual. There is also the risk that the employer will try to evade payment. This happens all too often. We have had several cases recently where companies have ceased trading either during the course of proceedings or after tribunal awards have been made against them.
Occasionally there will be a need for payments to be made to others- for example for medical reports or for medical records (as you might expect this is most common in disability discrimination claims). The client is normally responsible for these win or lose.
Another factor which needs to be dealt with in a no win no fee agreement is the possibility that things will not go to plan and for one reason or another the client and solicitor part company before the case is finished. An agreement will always include machinery to deal with such an event.
There is also the possibility that a claim will be successful but the outcome will not be a straightforward monetary award. This is quite unusual. The most common example is where a dismissed employee is re-instated in their old job. Provision is made in the agreement for the client to make a payment calculated by reference to a claim of notional value should they be fortunate enough to be given their job back.
Despite being the commonest way of funding for those with no external source of funds a no win no fee agreement is really the last resort. Even so apart from the obvious and significant drawback that a successful claimant receives only 65% of their compensation- in most cases the no win no fee agreement provides a satisfactory and trouble free way to fund a claim.