The bigger the cost, the more people are generally put off when looking to start a claim. There was a time when things were far more simple – most lawyers could offer a sound no win, no fee agreement and allow you to keep all 100% of your payout if the claim wins.
Then the government came along, having caved to pressure from the vastly wealthy insurance industry, to ‘shake up the system’ leaving victims more worse off than ever. Read on for VITAL ADVICE!
I will outline the changes, how they can affect you, and how you can minimise the risk and cost to you when making a claim for personal injury compensation.
The changes
The government introduced something called Qualified One Way Cost Shifting with the Legal Aid Sentencing and Punishment of Offenders Act in April 2013, together with some general changes as well. This massive shake up of the system resulted in:
- Compensation victims being unable to recover all of their legal fees from an at-fault opponent
- Bans on the payment of referral fees and incentives for the introduction of clients to law firms
- Massive – no, ridiculous – slashes in the amount a law firm can recover with set fixed fees
This now means that a client can be charged up to 25% from their payout for something called a Success Fee which is no longer recoverable. It’s been capped at 25%, and most lawyers are taking the full amount. In addition, you cannot recover the cost of insurance from the opponent which can be used to protect you from having to pay certain costs if something goes wrong.
The ban on referral fees was a welcome step – we have always been against them and all of our clients have only ever come to us directly over the years we have been fighting for accident victim’s rights. But I will go on to explain below how it has pushed up the cost of claiming for those who find a law firm through a middleman claims company.
The Hidden Costs
Most law firms now take the full 25% from your payout. The problem is that it isn’t very attractive to a person in a world where most people are still under the impression that 100% compensation is a given that they face losing a quarter of their compensation. What we have found is that many firms will simply not advise people the changes and the charges. We get loads of calls from people who spoke to a firm, got the paperwork, and only then realised it was 25%.
You should always read the paperwork provided for a claim, but some people may not read it thoroughly enough and may end up agreeing to start a claim without properly understanding they will lose 25%. Don’t get me wrong – the duty is for you to read paperwork before signing it, but when the law firm doesn’t tell you upfront about it, it’s because they’d probably rather you not notice…
We have had calls from people who have got to settlement stage and only then realised – when it’s too late to do anything about it.
If you go through a claims company or accident advice service, because they cannot get a referral fee from the solicitor anymore, they now need to get paid in another way. We have seen that many will take their own percentage from the victim’s payout – meaning overall deductions of something like 40%! Again, you should always read any paperwork that you receive; but not everyone does, and some people accept it without question.
There may be additional charges for insurance that cannot be recovered, and with fees now at an all time low for lawyers, you could still be facing additional charges. If the claim doesn’t win, make sure the no win, no fee actually does mean you pay nothing.
So how do I stay safe?
Firstly, be concerned if a law firm doesn’t openly discuss the charges with you. If they do not inform you of the changes and the 25%, I’d be concerned if I were you. Not being upfront with you about something as important as fees is a bad sign and not the most trustworthy of ways to start a solicitor-client relationship.
Secondly, find out exactly when and where you can be charged, and how much those fees are. If there are too many fees and it all gets confusing, then the law firm you’re talking to may not be the right one for you. You should be able to easy understand what charges you can incur, and how much they will be.
Thirdly, stick to going to law firms direct. Avoid middlemen who may take their own cut. You don’t need them – you can go directly to a law firm and arrange your own agreement safe in the knowledge there are no middlemen taking a slice as well.
Want a fantastic deal?
Call us on 0800 634 75 75 – we make it simple and easy. Don’t believe us? Give us a bell and find out for yourself!
