In the good old days (well, prior to April 2013) most innocent accident victims could settle their claim for personal injury compensation safe in the knowledge that they would receive all 100% of their payout.
But then the vastly wealthy and hugely influential insurance industry applied more and more pressure on their government friends to shift some of that cost on to the victim. It doesn’t make sense – why should the VICTIM have to pay? But sadly the government went ahead and changed the rules anyway…
So how much can a personal injury lawyer charge you now?
The Law Change
Essentially the changes from April 2013, known as Qualified One Way Cost Shifting, have:
- Slashed lawyers legal fees by an unjustifiable degree
- Stopped lawyers recovering their Success Fee
- Stopped lawyers recovering the premium for any After The Event insurance they take out
The result is that:
- Access to justice can be more limited
- You will probably lose a percentage of your payout if a case wins, and you may be asked to pay for upfront fees and additional charges
Now whatever you do, don’t blame us lawyers! Contrary to popular belief, we don’t receive massively inflated fees for cases as we can only recover what we have actually spent on a case. We can only recover what is reasonable as well – so we can’t recover more money by offering a ‘better’ service to a client so to speak; often referred to as cost building.
Now we live in an age of fixed fees and not being able to recover all of our fees from the at-fault opponent. Lawyers do need to spend time and considerable amounts of money on cases and existing as a law firm in general.
So what can I be charged?
Well it’s a little difficult to say as it can vary between law firms. But here is what I can tell you about the law and what we know from our research so far:
- The amount of the Success Fee that can be taken from your payout is capped at 25%. So you cannot lose any more than 25% from your payout to cover this
- Most lawyers have settled on 25% as a ‘market rate’ and most will now take the full amount
- If you claim through a claims management company or accident advice service (needless middlemen; you can just go to a law firm directly) then expect upfront fees or further deductions
But here is what we know from research so far, as it seems some accident victims are losing way more:
- Many lawyers will have additional upfront fees or additional percentages to cover other fees. The total can be deductions of, say, 40%!
- As long as the additional percentages are not for the Success Fee they are not breaking the law. They could take 25% for the Success Fee and then 15% to cover other fees; thus getting around the cap
- If there is a shortfall between the fees your solicitor has incurred and what they recover, many agreements allow solicitors to come to you for the remainder
The latter one is quite an important one to consider. In a hypothetical scenario, let’s say you agree to a 25% deduction for the Success Fee and an additional 15% for other fees. You also have to pay for insurance which is £400 but this can come off at the end of the claim.
You settle your case for £2,500, but you lose half of that in deductions meaning you are left with £1,250. You now need to pay for the insurance too, so deduct another £400 and you’re left with £850.
But let’s say your lawyer’s fees are £1,500 but they can only recover £1,000 as they are fixed due to the law. If they can charge you the shortfall in their agreement with you, which is £500, then you will only end up with £250 as your payout!
You’re now down to a tenth of your settlement figure – a 90% loss! Most people don’t realise that this is how it works though, and they end up with one heck of a shock at the end of the claim when all these fees are suddenly taken from the payout.
So what can I do?
Be careful who you instruct and make sure you know all about what fees you could incur, and check paperwork carefully. At The Injury Lawyers we don’t have to take the full 25% and for most claims there are no upfront fees or additional fees you can be stung with. We believe in clients claiming the safe way, so contact us on 0800 634 75 75 for an upfront and honest discussion about how it will all works.
