It is not so long ago that legal aid was available for personal injury claimants. A claimant who had the protection of legal aid could pursue their injury claim, safe in the knowledge they would not have to pay their own solicitors’ costs, whether they won the case, or not. Legal Aid also acted as protection against having to pay the other side’s costs in the event that they lost their case.
All of this changed, when in the year 2000, legal aid for most personal injury cases was abolished.
Instead, Conditional Fee Agreements (CFAs), or No Win No Fee agreements as they are more commonly known, started to be used on a more regular basis as a means of funding personal injury claims.
How does No Win No Fee work?
There are plenty of guides about that go into great details about how No Win, No Fee agreements work. You will find Mooneerams solicitors own No Win No Fee Advice guide useful.
Here is a brief explanation of what happens when you sign up to a No Win No Fee agreement to pursue a No Win No Fee personal injury case.
- If you lose your case, you will not have to pay any of your opponent’s legal costs or your own solicitors costs. That is what the term ‘No Win No Fee’ means.
- If you win your case, you will have nothing to pay the other side (as they lost). You will have to pay a fee to your solicitor. The amount you pay will be a proportion of the damages (compensation award) you receive from winning the claim. The terms of the conditional agreement you signed before your claim started outline how that sum gets calculated. It is usually expressed as a percentage of your compensation capped at no more than 25% of the damages you recovered.
There is no hidden catch with No Win No Fee then?
Conditional Fee Agreements were not invented to try and catch clients out. Exactly the opposite. The way No Win No Fee agreements work is straightforward. The fact they are such a simple idea could be the reason why some potential clients are suspicious about them.
When the Access to Justice Act 1999 came into force in 2000, it abolished legal aid in personal injury claims. No Win No Fee Agreements filled the vacuum. They ensure ordinary people are still able to get access to justice.
No Win, No Fee agreements do what their name suggests they should. They prevent claimants from facing legal cost bills if they lose a case. If the claimant wins their case, they will pay a fee to their solicitor. This will be a proportion of their compensation. The amount will be calculated in accordance with the terms of the No Win No Fee Agreement.
Why do some people complain that they have been hit with hidden or unexpected fees under a No Win No Fee Agreement?
Problems arise when clients fail to fully understand the terms of the No Win No Fee agreement. Many CFAs are quite lengthy documents and can be difficult to understand.
It is the job of the solicitor that offers you the No Win No Fee agreement to explain it to you. If a dispute arises after the CFA has been signed and the claim has been successful, it is usually because:
- The amount of the solicitor’s fee, deducted from the compensation awarded, is higher than the client expected.
- An After the Event (ATE) insurance premium has been deducted that the client knew nothing about at the time of entering into the CFA. Or it may be the case they knew a premium would be deducted but did not expect the amount to be as high as it has turned out to be.
- Barrister’s/Counsel’s fees have been deducted from their compensation. These fees can amount to large sums. If Barristers fees are to be deducted as a specific item, the CFA should make provision for this. The provision should be pointed out to the claimant before they agree to sign the agreement.
The onus is on the solicitor explaining the CFA to the you, to make sure that you understand all the terms of the No Win No Fee agreement before you sign it. It is also important that you do not sign the agreement until you feel that you have a reasonable understanding of the main points. It is easier to ask the solicitor to explain something several times, before you sign an agreement, than it is to get into a dispute over fees that you did not expect to be deducted from your injury compensation award.
Deduction of an after the event insurance premium from your compensation
When you instruct personal injury solicitors to pursue a claim, they may ask you to take out an After the Event (ATE) insurance policy at the same time that you enter into the No Win No Fee agreement.
The purpose of an ATE policy is to cover you financially, should you lose the claim. If you lose the case, the insurance will pay out the other side’s costs. You will have nothing to pay towards the cost of the insurance if your case is lost.
If you win the case, you will have to pay the cost of the insurance premium. This sum will be in addition to the fee you have agreed to pay your solicitor for winning the claim.
The solicitor cannot deduct the premium from your compensation unless the terms of the No Win No Fee agreement, specifically provide for this. These premiums can amount to hundreds of pounds.
It is important you know beforehand whether a policy is going to be taken out on your behalf, how much the insurance premium will be and whether, in the event of you winning the case, a separate charge for this will be taken from your compensation.
Some experienced personal injury solicitors will decide not to take out an ATE policy for their No Win No Fee clients as a matter of course at the start of every case. They will back their judgement that you have a good and winnable case, without resorting to expensive insurance.
After all, a solicitor who takes on a No Win No Fee case will only get paid if they win the case for you. In the meantime, they will have paid, up front, fees for experts’ reports, police reports, medical records, and court fees.
They will not do this (on a regular basis anyway) unless they think your case will be successful. As long as the CFA agreement says that if you lose your case, you have nothing to pay, then you have nothing to fear.
Why won’t I get 100% of my compensation?
You will probably remember seeing the adverts on TV, promising that:
“You’ll receive 100% of your compensation if you use X solicitors.”
Indeed, a few years ago, it was possible for a client to recover 100% of their compensation, with no deductions. However, on the 1st of April 2013, government legislation was introduced which completely changed the position.
From that date, it became no longer possible for solicitors in winning personal injury claims to recover what is known as the ‘success fee’ from insurance company of the losing party. As a result, ‘getting back 100% of your compensation’ is a slogan that has been confined to history!
One notable exception to this is in the case of asbestos disease claims. Some asbestos solicitors are still able to guarantee that their clients receive 100% compensation
No Win No Fee claims for personal injury have become commonplace since legal aid was abolished. In most cases they work extremely well, to the satisfaction of both client and solicitor.
When things go wrong it is usually because the lawyer has failed to adequately explain the terms of the No Win No Fee agreement to their client.
Providing clients with a clear explanation as to how the No Win No Fee Agreement works is the key so that when they sign the agreement, they are providing their informed consent to any deductions that will be taken from their compensation.
Mooneerams solicitors are experienced No Win No Fee personal injury solicitors. To find out more about how we can help you make a No Win No Fee claim, call us on 029 2048 3615. You can also contact us online or by sending your details to us using the form to the right of this page. We will call you straight back.