The new rules that have shaken the personal injury claiming world to its core has left a trail of confused accident victims in its wake. For a long time we have been used to the idea of 100% compensation for most types of claims, thanks to the access to justice principle which recognises that the innocent victim shouldn’t have to lose out when making a claim.
But we all know the Tories love a good bout of cuts and love to reshuffle the law – the changes from April 2013 have gone way too far and many people simply don’t know where they stand anymore.
We do get a lot of enquiries from people who have hit the medical report or later stages of their case with another law firm who then ‘discover’ that they will lose 25% of their claim and have to pay for insurance. The reality though is that many people are losing out on way more than that, with deductions as high as 45% in some cases.
So why are you being charged for all this and why weren’t you aware of this when you started the claim?
The origin of the charges
Our government in its infinite wisdom caved to pressure from the vastly wealthy and influential insurance industry to lower the cost burden on them for claims. It doesn’t really make any sense – I mean, insurance is there to insure people. Victims who then need to recuperate losses ought to be entitled to get them back in full, right? Why should they lose out when they are the innocent victim?
But that’s not always how the law and politics works – often it can be down to influence and finances.
So the government stopped you from recovering all of your legal fees from the opponent. The result is that you can no longer recover a Success Fee or the cost of After The Event insurance. Not only did they do that, but they also slashed the amount of the fees that can be recovered as well.
It was bad – and the result is that access to justice and the quality of legal services on offer has been significantly reduced.
Now a lawyer can charge you up to 25% from your payout to cover their success fee. 25% is a cap imposed by law so that no more can be taken to cover this fee – but it doesn’t stop lawyers getting round it by taking 25% for the Success Fee and then an additional 20% for general fees. The insurance can be charged as a percentage or as fixed amounts. Different lawyers are working in different ways.
Why weren’t you aware?
A lot of people they say it comes as a surprise when they learn that they are going to lose 25% of their payout and have to pay fees. Now, we can’t really comment on how this is so, because we are totally upfront about how things work with us. All we can do is take what we have been told by other people, which is that some law firms will purposefully not tell you about charges, or try and ‘trick’ you so to speak by using phrases such as “100% no win, no fee” or “no payments to make”.
100% no win, no fee doesn’t mean 100% compensation, and a percentage doesn’t necessarily have to be seen as a ‘payment’ as it’s more of a deduction.
BUT- and this is a very big but – charges must be clearly identified in paperwork, so if you have agreed to paperwork without properly reading it, you may end up not knowing about these kinds of fees. Some people won’t bother with the T’s and C’s because they’re satisfied with what has been advised to them on the phone – but what you may have been advised of may not be what it seems.
So there can be a degree of misunderstanding, but failing to read the paperwork properly or at all is, I’m afraid, a big problem for you. If you have signed or agreed to it, then you’re bound to the terms of that contract. Therein is the huge problem about being tied in to something you may not have thought was a bad thing for you.
But it’s your responsibility to read and only agree to the paperwork if you are satisfied with it. As such, you’ll struggle to get out of it if you have agreed to it.
