Red flag

Uncapped success fees

A percentage fee with no upper limit rises in step with the claim, however large it gets. Sometimes that is fair; sometimes it is the most expensive term in the letter.

A red flag is a reason to ask more questions. It does not mean an adviser has done anything wrong. This page describes a practice in general terms and is not about any particular firm.

When it is a problem

The claim could turn out much larger than expected, because a big project is in progress or the business is growing, and the fee would rise with it while the work stays much the same.
The fee applies to the amount claimed, so a later reduction leaves you owing the full fee on money you have repaid.
The percentage is high for the size of the claim, and a cap was never offered or was refused when you asked.
Nobody has shown you a worked example at twice the claim you expect, so you have not seen the number you would pay in a good year.

When it is not a problem

The claim is small and will stay small, so no realistic cap would ever be reached; a cap would add words to the letter and change nothing.
The percentage is modest and applies to the amount received, so the fee already falls if the claim is reduced.
You have seen the fee at the largest claim you can imagine and you are content with it, perhaps because a larger claim is also more work and more risk for the adviser.
The adviser has offered a cap and you have chosen not to take it, because a fixed or capped alternative cost more on the claim you expect.

What to do

Ask for a worked example on your figures, at the claim you expect and at double it.
Ask whether the fee applies to the amount claimed or the amount received.
Ask for a cap, per year or overall, at a figure you would be comfortable paying. The script for asking for a fee cap gives you the words.
If the answer is no, decide with your eyes open: the capped fees and fixed fees pages show the alternatives on the same claim.

When it is a problem

When it is not a problem

What to do

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