No Win No Fee and Beyond: Funding Civil Litigation in England and Wales

Litigation in England and Wales carries two price tags, and it is the second one that ruins people. The first is your own lawyer's bill, which for a fully fought claim of any substance can run deep into six figures. The second is the loser-pays rule: lose at trial and you will usually be ordered to pay a large share of the other side's costs on top of your own. Any honest conversation about bringing a claim therefore starts not with the merits but with the money — how you will pay your own lawyers, and what happens to you if you lose.

The funding market has never offered more ways in: no win no fee agreements, deals in which the lawyer takes a share of the winnings, commercial funders who bankroll the case for a slice of the damages, and insurance that caps or removes the downside. But every route has caps and catches of its own, and one of them was thrown into open confusion by the Supreme Court as recently as 2023.

This guide maps the options, from the insurance you may already own without knowing it to the professional funders behind the biggest group claims, and ends with a framework for matching the route to the size and risk of your claim. For who pays costs at the end of a case and how much, see our separate guide to costs orders — this article takes the loser-pays rule as given and asks how a sensible claimant finances living with it.

Start with the insurance you already own

Before-the-event legal expenses insurance — BTE, in the jargon — is the most under-used funding source in England and Wales. It is sold as a cheap add-on to home, motor and small-business insurance policies, and a remarkable number of people are covered without ever realising it. A typical policy will pay legal costs for defined categories of dispute — employment, consumer and contract claims, personal injury, problems with neighbouring property — up to a cover limit set by the policy — typically enough to run a modest dispute properly, rarely enough for heavyweight litigation.

So the first move in any dispute is unglamorous: dig out every insurance policy you or your business holds and read the legal expenses section. Two cautions. First, BTE policies almost always require prompt notification and the insurer's consent before costs are incurred — instruct solicitors first and tell the insurer afterwards and you may forfeit the cover. Second, insurers will steer you towards their own panel solicitors; your right to insist on a lawyer of your own choosing generally strengthens once proceedings are issued. Imperfect as it is, free is free. For a modest dispute, BTE cover can carry the entire case.

No win, no fee: conditional fee agreements

The conditional fee agreement, or CFA, is what most people mean by "no win no fee". Made lawful by section 58 of the Courts and Legal Services Act 1990, a CFA provides that your lawyer's fees, or part of them, are payable only if the claim succeeds. If it succeeds, the lawyer charges the normal base fees plus a success fee — an uplift that compensates the firm for the risk of earning nothing on the cases it loses.

The caps on the success fee

The success fee is capped twice over. First, it can never exceed 100 per cent of the base costs — a lawyer running a genuinely risky case can at most double the fee. Second, in personal injury claims there is a further cap: the success fee cannot take more than 25 per cent of the damages recovered, and that percentage is applied to general damages and past losses, not to compensation for future care and future loss. The cap exists precisely to stop the uplift devouring the money meant to fund an injured claimant's future.

The 2013 watershed: the winner now pays the uplift

Until April 2013, a winning claimant could recover the success fee — and the premium for any insurance against adverse costs — from the losing defendant, which made no win no fee feel close to free. The Legal Aid, Sentencing and Punishment of Offenders Act 2012 ended that. The success fee now comes out of your own recovery. A CFA still transforms access to justice, because it removes the need to pay lawyers as you go and aligns the firm's interests with yours; but it is not costless. Before signing, ask the solicitor to model the arithmetic on a realistic settlement figure: base costs, uplift, insurance premium, and what actually lands in your account.

Discounted and hybrid CFAs

Between full rates and full no win no fee lies a spectrum worth negotiating over. Under a discounted CFA, you pay a reduced hourly rate win or lose, with the balance and an uplift payable only on success — the firm shares the risk rather than carrying all of it, and the discount buys you a smaller success fee. Barristers can act on CFAs too, and it is common to have solicitors on ordinary rates while counsel carries the risk, or vice versa. These hybrids are the workhorses of commercial claims that are strong but not certain.

Damages-based agreements: the lawyer takes a share

A damages-based agreement, or DBA, is the true contingency fee: the lawyer's payment is an agreed percentage of whatever you recover, and nothing if you lose. DBAs have been lawful in civil litigation since 2013 under the Damages-Based Agreements Regulations 2013, with the percentage capped at 50 per cent of recoveries in most civil claims, 35 per cent in employment matters and 25 per cent in personal injury.

On paper this is the simplest deal in the market. In practice, solicitors avoid DBAs. The 2013 Regulations are notoriously awkwardly drafted, and the sanction for getting the drafting wrong is total: a non-compliant DBA is unenforceable, and the firm recovers nothing at all for years of work. Uncertainty has also dogged hybrid arrangements combining a DBA with some payment win or lose. The result is that DBAs occupy a niche — employment claims, some commercial claims with very confident firms — rather than the mainstream role contingency fees play in the United States. If a firm does offer one, compare the percentage against the CFA arithmetic; on a large recovery, 40 per cent of the damages can dwarf even a doubled fee.

Third-party litigation funding

For claims too large for any individual or ordinary business to fund, there is a professional market. A litigation funder pays your legal costs — sometimes your ongoing overheads too — in exchange for a return out of the winnings, typically structured as a multiple of what the funder spent, a percentage of the recovery, or the greater of the two. The funding is non-recourse: lose, and you owe the funder nothing, though the courts can order a funder to contribute towards a successful opponent's costs, which is why funded cases almost always carry adverse-costs insurance alongside.

How funders pick cases

Funders are portfolio investors, and they decline the overwhelming majority of what they see. The screening logic is consistent across the market: strong prospects of success supported by counsel's opinion; a defendant who can actually pay, with assets somewhere enforceable; a realistic litigation budget; and — critically — a claim value that is a healthy multiple of that budget, since the funder's return, the insurance premium and the lawyers must all be paid before the claimant sees anything. Many funders look for damages of several times, often around ten times, the costs they are being asked to commit. The practical consequence: third-party funding is for claims worth well over a million pounds, and for group claims that aggregate many smaller losses. A funded claimant, particularly a corporate one, should also expect the defendant to probe the arrangement and, in some circumstances, to apply for security for costs.

PACCAR and the unsettled aftermath

In R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28, the Supreme Court held that litigation funding agreements in which the funder's return is calculated as a percentage of the damages fall within the statutory definition of a damages-based agreement. Since almost no funding agreement had been drafted to comply with the DBA Regulations — the entire industry had assumed they did not apply — the decision rendered a swathe of existing agreements unenforceable as written, and funders scrambled to restructure their returns around multiples of outlay instead of percentages. Legislation to reverse the decision was introduced in 2024 but lapsed when the general election was called, and an independent review of litigation funding has since recommended both reversal and a new regulatory framework. At the time of writing the position remains unsettled. If you are offered funding, treat the enforceability and structure of the funder's return as a live legal question and take specific advice on the term sheet — do not assume the template is safe.

After-the-event insurance: insuring the downside

After-the-event insurance — ATE — is bought once the dispute has arisen, and it covers the nightmare scenario: an order to pay the other side's costs if you lose, and usually your own disbursements such as court fees and expert reports as well. It is the natural partner of a CFA, and together they form the classic no win no fee package: the CFA removes the need to pay your own lawyers up front, the ATE policy removes the adverse-costs risk.

ATE premiums are priced to the risk and they are not small — often staged so the premium steps up as trial approaches, and commonly deferred and contingent, meaning payable only if you win, out of the recovery. Since 2013 the premium is no longer recoverable from the losing side, with a narrow surviving exception in clinical negligence, so it is one more deduction from your damages. Two practical points. Insurers scrutinise the merits before offering terms, so a refusal of ATE cover is itself useful — and sobering — information about your case. And once insured, keep the insurer informed: rejecting a sensible settlement offer against advice can imperil the cover, and a well-judged Part 36 offer from either side redraws the costs risk the policy exists to absorb.

Personal injury: QOCS changes the maths

Personal injury claims run under different rules. Qualified one-way costs shifting — QOCS — means a losing personal injury claimant is generally not made to pay the defendant's costs at all. The protection is qualified, not absolute: it is lost where the claim is fundamentally dishonest or struck out as an abuse, and defendants can set off costs orders in their favour — including those generated by failing to beat a settlement offer — against the sums awarded to the claimant. But for the honest claimant, QOCS removes most of the downside that ATE insurance exists to cover. The standard package in personal injury is therefore a CFA with a capped success fee plus QOCS protection, with insurance confined largely to disbursements. It is why no win no fee remains genuinely accessible in injury claims in a way it is not for ordinary commercial disputes.

What happened to legal aid

Readers sometimes assume legal aid is the safety net beneath all of this. For civil money claims, it effectively no longer exists. The 2012 reforms removed most ordinary civil litigation from the scope of legal aid; what survives is a set of narrow categories — homelessness and possession cases, disputes involving domestic abuse, mental health and community care, some discrimination and judicial review claims — all subject to strict means and merits tests. If your dispute is a breach of contract, a negligence claim or a business falling-out, assume there is no public funding and plan accordingly. Law centres, university clinics and pro bono schemes can fill fragments of the gap, particularly for advice at key moments, but none of them will run a heavy trial for you.

Negotiating the retainer like a commercial buyer

Whatever route you choose, remember that legal services are a market and almost everything is negotiable. Tactics that work in practice:

Stage the case. Instruct in phases — letter before action, issue, disclosure, mediation, trial — with a fixed or capped fee and a go or no-go review at each gate, rather than an open-ended retainer.
Ask for caps. Many firms will cap fees per phase or overall if asked, especially for a new client with a credible claim. A cap converts an open cheque into a budget.
Propose a hybrid. A discounted CFA — reduced rates win or lose, uplift on success — is often acceptable to firms that would refuse a full CFA, and it signals your own confidence in the claim.
Interrogate the rates. Ask who will actually do the work, at what rate, and why a partner is needed for tasks an associate can do. Ask for the costs budget the court would eventually require, at the outset.
Consider unbundling. For smaller claims, paying for discrete advice — a merits opinion, a settled pleading, a rehearsal before a hearing — while you conduct the litigation yourself can buy most of the value at a fraction of the cost.

Matching the route to the claim

Pulling the threads together, funding follows claim size and risk:

Small claims (up to £10,000). Costs recovery between the parties is minimal in both directions, which is its own protection. Fund the case with your own time, spend selectively on unbundled advice, and check for BTE cover first.
The fixed-costs zone (roughly £10,000 to £100,000). Fixed recoverable costs now apply to most money claims worth up to £100,000, so even a winner recovers a set tariff rather than actual spend. Capped or fixed own-side fees matter more than ever here; a CFA is possible but the success fee bites hard into modest damages.
Mid-value claims (six figures to around £1 million). The territory of the discounted CFA plus ATE insurance, or a DBA if you can find a firm willing. Usually too small for third-party funders to price economically.
Big-ticket and group claims (well over £1 million). Third-party funding becomes realistic — at the price of a funder's return, funder oversight of settlement decisions, and post-PACCAR care over how the agreement is structured.
Personal injury at any value. CFA plus QOCS is the standard and usually the right answer.

One final discipline. Funding and merits interlock: every funding route from BTE cover to a professional funder begins with someone hard-headed assessing whether your claim is actually likely to win, and a claim no insurer or funder will touch is telling you something. Do the same assessment yourself, honestly, before you commit a penny — and revisit it at every stage gate you have negotiated.

This article is published by CommonBench for informational purposes only and does not constitute legal advice. To pressure-test the strength of your claim and research the costs and funding rules that apply to it before you sign any fee agreement, try CommonBench — AI-powered legal research with verified citations across five common law jurisdictions.