It is natural to be concerned about legal fees, but with no win, no fee arrangements available, you needn't worry.
At the end of your case, the losing party is usually required to pay a contribution towards the winner's legal fees. A no win, no fee arrangement is designed to protect you against the cost of losing. If you win, you are likely to have to pay something towards your legal fees out of your damages, but we limit this to a percentage of your compensation. This percentage is a cap, so what you end up paying may actually be lower.
There are various types of no win, no fee arrangements. Most cases are run using a Conditional Fee Agreement together with an insurance policy that we take out for you. Alternatively, you may already have insurance cover for legal expenses. Finally, in certain cases where you claim money from someone other than the person who has injured you, such as hit and run drivers and criminal injuries, a Contingency Fee Agreement may be used.
See below for more information about how the different fee arrangements work.
Conditional Fee Agreements
Conditional Fee Agreements, or CFAs, are what solicitors usually mean by "no win, no fee agreements". In the agreement itself, we agree that if you lose, we won't charge you for our work.
You also need protection against having to pay your opponent's legal fees and your own disbursements if you lose. Disbursements are the fees we need to pay to other people, such as to a doctor for a medical report on your injuries, or court fees if your case needs to go to court. We can take out insurance for you to cover these.
This means that the CFA covers our fees, and the insurance covers everything else, so you pay nothing if you lose.
If you win your case, your opponent's insurers pay an amount towards your legal fees. This amount is often a fixed fee set by law, so although sometimes it will cover everything, more often it does not. If it doesn't, we agree to limit the total legal costs to you*, including the cost of the insurance, to 25% of your damages, or 35% if you need us to pay your disbursements for you during the course of the case.
These percentages are caps, so if the total costs are less, you pay the lower amount. In addition, we only charge that percentage against your compensation for your injuries and past financial losses. In bigger cases where there is a claim for future losses, those future losses are likely to be for important things like medical costs or long-term loss of income. We don't believe damages for future losses should be eaten away by legal fees.
During the case we will have to incur fees charged by others, for example fees for medical reports or court fees. We will be able to claim these back for you at the end of the case, either from your opponent if you win, or the insurance if you lose. However, sometimes the providers require their fees to be paid before the case ends. If that happens, you can choose to pay these yourself. Often your opponent can be required to pay an early payment towards your eventual damages and legal costs, known as an interim payment, and this can be used to fund your disbursements.
If you fund these fees either from your own pocket or from interim payments, our maximum fee to you will be 25% of your damages. If you ask us to fund your disbursements for you instead, our maximum fee will be 35% of your damages.
Most solicitors who do personal injury cases offer CFAs. Most limit a certain part of their charges, known as the "success fee" to 25% of the damages, which is the maximum permitted by law. We limit our success fee to 25%, but we also limit our total legal costs to you* (including the cost of the insurance and the difference between our charges and the costs payable by your opponent) to 25%, or 35% if you ask us to fund your disbursements. Solicitors who do not offer that wider limit can potentially charge you for the cost of the insurance and any shortfall of costs not payable by your opponent in addition to the 25%, making their fees quite open-ended.
With our no win, no fee agreement, you know that if you lose you pay nothing, and if you win you pay a maximum of 25% or 35% of your damages, depending on who you decide funds your disbursements during the case.
* The "total legal costs to you" means the amount you are required to pay out of your damages, after any payment of legal costs by your opponent.
Legal Expenses Insurance
Some people already have insurance for legal expenses. Legal expenses insurance is sometimes offered as an optional extra on other insurance, such as motor or home insurance. It can also be a benefit under things like trade union membership.
The details of the cover can vary, but in general it pays your legal fees if you lose your case. Some policies are quite comprehensive, while others require your solicitor to enter into a conditional fee agreement with you, so are not much better than the usual no win, no fee arrangement that solicitors offer anyway.
A lot of legal expenses policies require you to use the insurer's choice of solicitor, at least before any court proceedings start. This restriction is unlawful under European law, but unfortunately it has not been enforced by the UK financial authorities. Insurers impose the restriction because the solicitors they use have agreements with them to charge very low fees, which in turn means that they have to cut costs by having the actual case work done by trained but unqualified case handlers. Their solicitors are unlikely to be local, and we have taken over a number of cases in the past where clients have ended up very unhappy about how those firms have dealt with their case.
Legal expenses insurance is useful to have, but in general, unless the insurer is happy to grant cover from the start of the case, we notify the insurers of the case, and then only use it if and when court proceedings become necessary, when the insurers are required by the UK authorities to let you have a free choice of solicitor.
If you have legal expenses insurance, let us know. You may be covered if you had the legal cover at the time of your accident. You cannot buy this kind of cover after your accident because it does not have retrospective effect. It also does not usually matter if you have changed insurers or ended your cover after your accident, as long as you had it when your accident took place.
Contingency Fee Agreements
Most cases involve claiming compensation from a person or company whose insurance will be meeting your claim, and paying towards your legal fees. However, in some cases such as claims for hit and run accidents made to the Motor Insurers' Bureau, or for assaults made to the Criminal Injuries Compensation Authority, there is nobody to sue, and you are just claiming money from a body which covers these claims.
These bodies are required to pay either no legal costs, or only a limited amount. There are not usually any court proceedings. Because of this, and to ensure the legal costs you pay are in proportion to your damages, we charge a fixed percentage of your damages under a Contingency Fee Agreement. Our usual percentage is 35% including VAT, plus any disbursements (fees paid to others, such as for medical reports).
Why are legal costs so complicated? A history
Why doesn't the defendant who has caused the accident just pay for everything? Why do I have to pay anything?
It used to be fairly simple, the loser paid the winner's legal fees. If someone broke the law and injured you, as well as the injuries and financial losses they would also have caused you to incur legal fees. You wouldn't have had to had they not broken the law in the first place, so it was only fair that they should pay. On the other hand if you lost, that meant the defendant hadn't broken the law, so if you made them incur legal fees defending the case, it was only fair that you should pay them. For those that could not afford legal fees there was Legal Aid.
At the end of the 1990s the government decided that Legal Aid was costing too much. Personal injury cases were not contributing that much to the total bill, but it was decided to change things by taking Legal Aid away from most personal injury cases and replacing it with Conditional Fee Agreements, or "no win, no fee". With CFAs, solicitors agreed not to be paid if the case was lost, and insurance was taken out to cover the risk of paying the opponent's legal costs. In return for taking the risk of not being paid, solicitors would charge a "success fee" if they won, a percentage extra fee to reflect the risks of the case. The idea was that the success fees earned on winning cases would pay for the cases the solicitor lost.
That success fee and the cost of the insurance premium could be claimed back from the losing defendant, again on the basis that the defendant had caused the costs to be incurred by causing the accident in the first place. Defendants' insurers hated it and lobbied the government to change the rules. They argued that no win, no fee agreements were fuelling a "compensation culture" (they weren't), and that legal costs were too high.
In 2010 the government changed the law again to restrict the legal costs payable by insurers in road accident claims worth less than £10,000 in damages. Instead of paying the winning claimant's legal fees based on whether they were reasonable (which could be assessed by a judge if necessary), they paid a fixed fee based on the amount of damages and the stage at which the case settled. That fixed fee could be more than the solicitor's actual costs, but the fixed fees were set at a level where it would usually be less.
In 2013 there were further reforms, and now in almost all personal injury claims worth under £25,000, the insurers only had to pay fixed costs, rather than the actual legal costs incurred, and they were set at an even lower level. In addition, they no longer had to pay success fees or insurance premiums for the policies taken out by claimants, meaning the injured party now had to pay these themselves out of their damages. Damages for injuries were raised by 10% to give claimants a bit more money to pay these extra expenses, but generally that is less than the extra cost involved.
So now we are left with a rather complicated picture. Although the old, simple rule of the loser paying the winner's costs is still the basis of how things are done, there are lots of exceptions that have shifted different costs and expenses onto the accident victim, who never asked to be injured in the first place!
With our fee arrangements we try to make things simple again. Whatever the defendant does or doesn't pay, any cost to you payable from your damages is limited to a maximum percentage.