Chancery Lane warns against proposed ban on ‘no win, no fee’ deals

Law Society urges regulators to keep ‘no win, no fee’ but tighten safeguards after SSB collapse

The Law Society has urged regulators not to prohibit the term ‘no win, no fee’, warning that removing a widely recognised phrase could confuse consumers and fail to address the underlying issues exposed by the collapse of SSB Law. Its position forms part of a detailed response to the Solicitors Regulation Authority’s consultation on how best to protect clients of high-volume claims firms.

Concerns escalated after former SSB clients discovered they were liable for defence costs running into thousands of pounds, despite initially being told that their cavity wall insulation claims would be run on a ‘no win, no fee’ basis. Many of the claims were later found to be uninsured, leaving clients unexpectedly exposed to significant financial risk.

The Legal Services Board’s report last month was sharply critical of the SRA’s supervision of SSB Law. In response, the regulator sought views on whether to ban the term on the basis that it may give consumers a misleading understanding of costs and the potential risks inherent in litigation. The consultation has prompted debate over whether the phrase is too simplistic to capture the complexities of conditional fee arrangements.

The Law Society, however, has argued that a ban would be disproportionate. Instead, it supports introducing standardised protocols at the point of client engagement to ensure firms consistently provide clear, plain-language explanations of the agreement they are offering. These disclosures would set out potential costs, funding implications, litigation risks and any relevant insurance arrangements.

Mark Evans, president of the Law Society, said the SSB case demonstrated the need for enforceable standards in consumer-facing communications. He noted that many SSB clients did not fully understand the risks they faced, largely due to unclear or incomplete information at the outset of their claims.

Evans acknowledged that the ‘no win, no fee’ label has limitations but cautioned against removing it altogether. He said the phrase is “well-established” and understood broadly by both lawyers and the public. Replacing it, he warned, could unintentionally increase confusion unless regulators ensure clients are properly informed about success fees, deductions from damages and the possibility that some costs may still arise even if a claim succeeds.

The Society also criticised the SRA’s own regulatory performance, arguing that the failures surrounding SSB Law highlight weaknesses in its financial scrutiny and supervisory systems. Evans said the regulator should strengthen its oversight mechanisms before pursuing major reforms of the sector.

He added that the SRA should improve its intelligence-sharing processes, risk profiling and preparedness to act promptly when concerns emerge. According to the SRA, it is currently investigating the conduct of 76 high-volume consumer claims firms. It has also written to 500 firms over the summer, requesting detailed caseload information and compliance declarations.

The consultation on potential reforms remains ongoing as regulators assess how best to balance consumer protection with clarity in legal services marketing.