No win no fee injury claims - is there a catch?
Conditional fee agreements (no win, no fee agreements) are the norm when it comes to funding personal injury claims - but are they all the same, is there a catch and is it worth shopping around before instructing a solicitor?
No Win, No Fee Agreements can vary considerably
There are several key areas in which no win, no fee agreements can differ. The following article explains these differences and how they can financially impact you as a claimant:
Hidden and unexpected Fees
Some no win, no fee agreements only cover the solicitor's legal fees. Costs that might not be covered include medical expert fees, Barrister's fees or the costs of the other side's solicitors as they defend the claim. These costs can run into thousands of pounds.
A surprising example of such a hidden fee can occur when a solicitor advises the client to drop a case, and the claimant chooses to pursue the case with a different solicitor. If the second solicitor wins the case, the claimant may then find themselves liable to pay a success fee to both the original solicitor and subsequent solicitor.
With some no win, no fee agreements costs may apply if:
- the solicitor advises acceptance of a settlement offer but the claimant refuses
- the claimant decides to settle out of court contrary to the solicitor's recommendation
- the claimant refuses to co-operate with the solicitor in some other way
- the other side is ordered to pay costs but cannot afford to
Inflated 'After The Event' or 'ATE' insurance premiums
In conjunction with the conditional fee agreement, most solicitors will require claimants to take out an 'After the Event' or 'ATE'' insurance policy before they start work on the case.
If you do not have ATE insurance and your claim is unsuccessful, then you would have to pay the defendant's costs.
As with any insurance policy, the cost of ATE insurance for a given claim can vary enormously between solicitors.
An ATE insurance policy through a Quittance panel solicitor on the same claim was quoted at £65*.
ATE policy costs are linked to the solicitor's track record
The cost of ATE insurance policies available to individual solicitors is linked to their track record of winning claims. The better the solicitor's record of winning claims is, the lower the ATE premium will be. The insurance company recognises that there is a smaller chance that they will need to pay out on a policy sold to clients of that solicitor.
Who pays the ATE premium?
If you don't win your claim, you will not have to pay for the policy.
If you do win, the cost of the policy (plus any referral fees), will usually be deducted from your compensation award.
Paying more for ATE insurance does not mean it is a better policy.
Some firms do not have access to lower rates due to their poor claims record.
Some companies earn referral fees from selling ATE insurance. Both of these factors can inflate the cost of the ATE insurance premium but have no bearing on the level of cover provided.
The level of ATE cover can differ significantly
At the time of writing the cover offered for identical accident claims varied from £25,000 to £100,000, with the cheapest policy offering the highest level of cover. This is because of the success rate of companies able to access those policies.
Unreasonable solicitors costs
Solicitors can reasonably expect to be paid for the work they do. However, some conditional fee agreements contain complicated remuneration mechanisms in the small print that can surprise the unwary.
Fees typically break down as follows:
Solicitors' legal fees are traditionally accrued at an hourly rate. However, under a no win, no fee agreement claimants should not have to pay any legal fees if the case is lost. If the case is won the solicitor's fees should be paid by the defendant.
However, if the other side believes the claimant's solicitor's fees are unreasonably high, they may challenge them. If the Court agrees, t may decide that the defendant does not have to pay the full amount. Depending on the terms of the agreement, you might have to make up the shortfall.
It is estimated that, on average, the courts reduce the solicitor's fees by around 30%.
This means that unless claimants have a conditional fee agreement preventing recovery of the excess solicitor's fees, claimants could see further deductions from their compensation.
In addition to the solicitor's fees, most firms charge a 'Success Fee'. This is an additional amount payable to the solicitor if they win the case.
The MOJ caps success fees at 25% of the compensation award. Most firms charge their clients the maximum success fee of 25%.
Before signing a No Win, No Fee agreement, claimants should be clear about what percentage of their compensation award will be paid to the solicitor as a success fee.
Insurance companies settle the majority of personal injury cases outside of court.
Approximately 5% of cases go to court. As most solicitors in the UK do not 'advocate' on behalf of clients, it would be necessary to instruct a barrister.
Barristers' fees can be costly and some no win, no fee agreements only cover the solicitor's fees.
Most no win, no fee agreements are drafted within the spirit of getting the best possible outcome for the claimant. However, you should always read the small print carefully before instructing a solicitor.
No win, no fee
With a no win, no fee agreement (known as a 'Conditional Fee Agreement' or 'CFA') you can make an injury claim without having to pay upfront legal fees. If your injury claim is unsuccessful you won't have to pay any money to your solicitor.
Our no win, no fee promise
Our no win, no fee guarantee means there is no financial risk in making an injury claim, even if you don't win your claim.
What do I pay if I win my injury claim?
Your injury solicitor will receive a success fee which is deducted from your compensation, after your compensation is awarded. The solicitor's success fee can be up to 25%. You and your solicitor can agree the success fee before you start your claim.
What do I pay if I do not win my injury claim?
If your injury claim is not successful then you will not have to pay any legal fees. Your solicitor may take out insurance to ensure there will be nothing to pay.
How can Quittance help?
Your solicitor will fight for the best possible compensation settlement for you, the highly-experienced panel of solicitors have an excellent track record of winning injury claims.
If you have any questions, or would like to start a No Win No Fee claim, we are open 8am to 9pm weekdays, 9am to 6pm on Saturday, and 9.30am to 5pm on Sunday.
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