In fact, the most vital requirement to the type of ‘success fee’ model is no remuneration if the case is not solved in favor of the client. Thus, the a lawyer inevitably takes the risk that regardless of the size of ‘success fee’, the payment will be credited only in the event of success, which is oftentimes quite difficult to predict.
The hourly rate payments, as well as establishing a fixed price for each service often leads to the fact that the cost of the work is higher, but not dependent on the outcome of the case.
Success fee, on the contrary, is a certain guarantee that in the event of losing the client will not have to pay a lawyer (at least he or she is not expected to cover all the expenses). Payment shall be made under the condition of a positive outcome. The contract may provide for the amount of compensation that partially covers the cost lawyer associated with the trial, but the costs associated with the loss of time of a lawyer, and, consequently, the possibility to take up another matter, are not paid for.
Thus, the economic risks associated with litigation are transferred from the client to the legal representative.
No win no fee roots
The history of the concept of ‘success fee’ takes its roots in medieval England. Champerty – management of a court case that implied paying a certain amount in the case of a win, was considered illegal, and this was due in part to a desire to restrict universal access to the judicial system.
Now this method of assessment is widely applicable, especially in the US and UK, where a well-developed, although very complex judicial systems with a high level of democratic due process are established. The concept has even contributed to the formation of a separate branch, saturated with private businesses – in UK, e.g. such companies as Forster Dean Solicitors, having a deep focus on accident claims and no win no fee practices, play a vital role in the national juridical services accessibility provision.However, in some European countries this category is illegal, since it is not consistent with the fundamental principles of the legal profession.
The wrong image
The media tend to talk about the exorbitant amounts of high-profile cases in which a lawyer receives a huge compensation for the work as a percentage of the winnings. But few know that such payment method assumes unprecedentedly high, long run risks, whether it is beneficial for the company in the mid-term prospects, whether it is applicable to each type of litigation and how it relates to the amount levied in the case of monetary compensation.
In fact, success fee is largely a pro-client tool. The clients who do not have sufficient funds or an opportunity to defend their rights in court take advantage of ‘success fee’ as the key to the door to the courtroom for the average person. Justice would have been virtually inaccessible to those who do not have the money with ‘success fee’ prohibited.