The legal profession is like most other service industries and is paid for by it's customers. A Conditional Fee Agreement (also known as a "no win, no fee" agreement) is when solicitors share the risk of the case with their clients. They do all the work for the case and only receive payment at the end, if they win. It is normally backed by Legal Expenses Insurance (LEI), meaning if the case is lost all the other costs are covered by the insurance.
When the case is won, the solicitor’s normal fees and disbursements (barrister’s costs, medical report fees, travel expenses etc) are paid by the losing party. However, in light of the risk the solicitor has taken, they are entitled to receive a success fee and since April 2013, this is now paid by the winning party and is usually paid from the damages received and is can be no higher than 25% of these damages.
If the case is lost, the solicitor receives no fee. Where the case is backed by Legal Expenses Insurance (LEI), the loser’s disbursements and the winning party’s costs are paid by the insurance. Where there is no insurance, the costs will need to be paid by the losing party.