Last year the government radically changed the way in which victims who are entitled to bring a claim for personal injury compensation can fund their cases. The days of 100% compensation, and thus 100% justice, for all who suffer at the hands of negligence are somewhat of a thing of the past now.
But it can be a minefield in knowing and understanding exactly where you stand with an agreement for a solicitor to act for you – so we have written this insightful guide to help you avoid the many pitfalls that people will often not consider.
The Changes
To give you a very brief understanding of what has changed:
- You can no longer recover a Success Fee if the claim wins. The Success Fee is an additional percentage lawyers charge for the risk of funding your case on a No Win, No Fee basis. As part of Access to Justice rules it has always been recoverable. Now, it isn’t
- You can no longer recover the cost of a policy of After The Event insurance if the claim wins. This insurance can be vital in protecting you from having to pay your opponents costs in certain scenarios and for unrecoverable disbursements. A disbursement is something paid out on your behalf as part of a claim
- Fixed fees – many cases are now a part of a fixed fee system which is excessively low and barely allow lawyers to be able to provide an efficient legal service
Irrelevant of whether or not you think that changes needed to be made or not, what the government has done is too much – they have simply gone too far and now the victims of negligence are suffering.
You can’t blame us lawyers – we never wanted these changes and its all down to the government and their close ties to the insurers.
The Pitfalls – Success Fee charge
A lawyer can now charge up to a maximum of 25% from your payout to cover their Success Fee. The amount of the success fee is dependent on your lawyers charges, but whatever it is, no more than 25% can be taken from your payout to cover it.
The market rate has settled on 25% where most law firms charge the full amount – BUT the key thing to know is that we do not HAVE to take the full amount. We can offer lower deductions than 25% and we as a firm will often do this. Don’t take it as gospel if a law firm tells you that “everyone charges 25%” or similar because this is simply NOT true. And yes, some law firms have been saying that to people! Bad guys!
Insurance Costs – how much is too much?
The amount of the insurance can vary from case to case and will often be dependent on the risk of the claim and who the solicitor uses as an insurer. We can be talking anywhere from a few hundred pounds to £1,500 in standard cases.
Here are some things you need to know:
- Some will ask for payment of insurance upfront but there are types of insurance where you only need to pay for it if the case wins. Paying upfront is not a wise option in many cases
- Some premiums are staged which means they can increase at certain junctures in a claim – are you aware of this, or how much you could actually end up being charged?
- If you are losing an additional percentage of your claim to cover insurance then you need to ask yourself whether you’re going to lose a fixed amount or an ‘up to’ amount
Additional fees
The government didn’t just stop you recovering all of your fees – they reduced, by insane amounts, what can be recovered as part of these overzealous fixed fee systems. Although you can only lose up to 25% from your payout to cover the success fee, it doesn’t stop a law firm charging you additional percentages for other fees. In an agreement between you and a law firm, the charges can in theory be whatever you agree.
We have seen agreements where the success fee is capped to 25%, there is an additional fee of 10%, and you are being charged insurance. Some lawyers may charge you additional fees as well on the basis that they have failed to recover all of their costs because o the fixed fee system.
What may seem like the standard simple 25% deduction could end up in you losing more than half of your compensation in legal fees!
A better way
So how do you make sure that you are not being robbed or duped in to paying more than you should? Let me tell you about The Injury Lawyers safer way of claiming which we can do for most cases we take on:
- No upfront costs or hidden fees
- Fixed deductions of no more than 25% – and often much less!
- No insurance costs – we cover you instead and you don’t have to pay for a premium. That way you get the benefit of indemnity without losing more money
