Legal aid was available for personal injury and medical negligence claims until the end of the last century. With the protection of legal aid, injured victims of another person’s negligence could pursue their injury claim, knowing they would not have to pay their own solicitors’ costs, whether they won the case or not. Legal aid also protected clients from being ordered to pay the other side’s costs if their claim was unsuccessful.
This changed in 2000 when the availability of legal aid was abolished for most types of personal injury cases. (Legal aid is still available in a small minority of clinical negligence cases.)
Since 2000, Conditional Fee Agreements (CFAs), or No Win No Fee agreements as they are commonly known, have been used to fund personal injury claims.
How does No Win No Fee work?
There are plenty of guides about how No Win No Fee agreements work. Mooneerams Solicitors‘, No Win No Fee guide is easy to follow and answers the most frequently asked questions about how No Win No Fee compensation claims work in practice.
Here is a brief explanation of what happens when you sign up for a No Win No Fee agreement to pursue a No Win No Fee accident claim.
If you lose your case, you will not have to pay your opponent’s or legal fees. This 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 sign before your claim starts 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 recover.
Is there a hidden catch with No Win No Fee, then?
Conditional Fee Agreements were not invented to try and ‘catch clients out’; precisely the opposite. The way No Win No Fee agreements work is relatively straightforward. The fact they are such a simple idea may be why some potential clients are suspicious of 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 can still get legal advice and assistance to fulfil their need for access to justice.
‘No Win No Fee agreements’ do what their name suggests they should do; they prevent claimants from facing huge legal 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 following the terms of the No Win No Fee Agreement the client signs.
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. In practice, many CFAs are pretty lengthy documents and can be challenging 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 from the client’s compensation that the client knew nothing about when entering into the CFA. Or it may be the case that they knew a premium would be deducted but did not expect the amount to be as high as it was.
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 include a relevant clause. The provision should be made clear to the claimant before they agree to sign the agreement.
The onus is on the solicitor who explains the CFA terms to make sure that you understand all the terms before you sign it. It is also vital that you do not sign the agreement until you feel that you fully understand the main points.
It is better to ask the solicitor to explain something several times before you sign an agreement than to get into a dispute over fees 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 the other side’s legal fees.
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 essential 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.
Many experienced personal injury solicitors will decide not to take out an ATE policy for their No Win No Fee clients at the start of every case. Instead, they back their judgement that you have a winnable case without resorting to the use of expensive insurance.
Remember that 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 upfront fees for experts’ reports, police reports, medical records, and court fees. They will not do this unless they think your case will be successful.
As long as the CFA agreement contains a provision that if you lose your case, you have no legal costs to pay, you will have no financial risk.
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, a client could recover 100% of their compensation with no deductions. However, on the 1st of April 2013, government legislation was introduced, which changed the position.
From April 2013, it no longer became possible for solicitors in winning personal injury claims to recover what is known as the ‘success fee’ from the insurance company of the losing party. As a result, ‘getting back 100% of your compensation’ is a slogan confined to history!
One notable exception to this is in the case of asbestos disease claims. Some asbestos solicitors can still guarantee that their clients receive 100% of the compensation amount recovered in the case.
Conclusion: Getting the compensation you deserve
No Win No Fee personal injury claims have become commonplace since legal aid was abolished. In most cases, they work well, to the satisfaction of both client and solicitor.
When disagreements occur between a client and their No Win No Fee lawyer, it is usually because the legal advisor has failed to properly explain the terms of the No Win No Fee agreement.
Solicitors should provide clients with a clear explanation of how the No Win No Fee Agreement works so that when their clients sign the agreement, they are providingtheir informed consent to any deductions taken from their compensation.
Mooneerams are experienced No Win No Fee solicitors. To find out more about how we can help you make a claim on a No Win No Fee basis, call us on 029 2048 3615. You can also contact us online, requesting a call back.