It’s a phrase that has become a mantra for personal injury and small claims lawyers. Imported from the US legal system in the mid-90s, No Win, No Fee is the consumer-friendly name given to a method of claims financing officially known as a conditional fee agreement.

It more or less works as the two names suggest - payment is conditional on the case being won. This means litigants don’t have to raise funds up front for expensive legal action, it is the lawyers that take on the risk, and final payment is usually taken as a percentage of the compensation won.

No Win, No Fee arrangements have become wildly popular, driving what some see as the not entirely welcome emergence of blame-and-claim culture in the UK. Their popularity has also led to their adoption in other professional services beyond law, including in debt collection.

The principle is exactly the same - a debt collection agency offering No Win, No Fee contracts will agree to take on your debt recovery for no up front payment, only charging you if they manage to recover your monies. It sounds great. So great that many potential clients ask, what’s the catch?

In a perfect world, there wouldn’t be any catch. No Win, No Fee should do exactly what it says on the tin, with the debt collectors taking on the financial risk of recovering monies owed as part of the service. Sadly, not everyone is entirely scrupulous in offering these arrangements the way they are intended. It therefore pays to do your research into who you are dealing with, and always read the small print carefully.

Red flags to look out for in No Win, No Fee contracts:

Admin fees: One sneaky way some debt recovery professionals try to get payment up front even when they offer No Win, No Fee arrangements is by dressing them up as administration fees. These might be buried in the T&C’s or given other names such as ‘debt placement fees’. They all mean the same thing - despite the No Win, No Fee claim, they are trying to get money out of you up front.

Hidden exclusions: Some agencies will have very narrow classifications of the types of debt they will offer No Win, No Fee deals for - basically the types of debt that they know will be easiest to recover. The danger is that they hide all sorts of exceptions into the small print which void the No Win, No Fee agreement - for example, if the debtor becomes insolvent, or the debt climbs above a certain value. These are all arbitrary and designed mainly to be able to charge you for services without recovering the debt.

Red flags to look out for in agency reviews

• Delayed payments: It is unfortunately all too common to read customer reviews for No Win, No Fee debt collection services where clients say they have received no money, despite knowing that at least some of the debt has been recovered.
• Poor service and communication: A classic modus operandi of unscrupulous debt collectors is to be very proactive, even in-your-face, when it comes to selling services and getting you to sign a contract - only to go mysteriously quiet once supposed recovery action starts. If there is any hint of an agency being obstructive about returning money they have recovered for you, avoid.
• Hidden fees: As per the small print red flags, look out for reports of customers being charged hidden or unexpected fees. This is a sure sign that an agency is not being entirely up front about how it operates.

Having spelt out all this, we wouldn’t want to put anyone off No Win, No Fee debt collection services. There are plenty of agencies out there who say it and mean it, and we would humbly include ourselves in that bracket. In fact, in our view, No Win, No Fee, or as we prefer, No Collection = No Commission, is the perfect way to fund undiputed debt recovery claims, especially as agency fees can now be added to what the debtor pays back. That means, not only does a client not have to pay up front to get back money they are owed, they don’t lose anything out of the debt at the end either.

From that perspective, No Win, No Fee debt recovery provides the fairest option for creditors. As with many things, you just have to do your due diligence about who you deal with.

Image "Money" from "Got Creditot Credit" used in accordance with CC by 2.0