Since the April 2013 rule changes there has been a significant amount of confusion as to where people stand, how much they need to pay, and what law firms can and cannot charge people. The reality of the situation is that many different law firms are charging many different things, so what is the average percentage or average charge of a law firm under the new system here in the UK?
There is a lot to look at – so read on for information about the changes and how they affect you and what you can expect to be charged.
The fees law firms cannot recover
The changes stopped the recovery of a success fee and the cost of an After The Event insurance policy. The success fee is a part of the fee lawyers recover to reflect the fact we take on and fund cases on a no win, no fee basis where there is a very real chance of us losing the claim and not getting paid. In that scenario you have essentially had the services of a lawyer for ‘free.’ The insurance can cover you for certain costs if something goes wrong.
So you can expect your law firm to charge a success fee as a percentage and potentially an amount for the insurance. Some law firms charge fixed amounts for insurance and some take additional percentages.
What you should know though is that the success fee is capped at a maximum of 25% which means that you cannot lose any more than 25% from your payout to cover this.
Typically many law firms will therefore at least charge 25% for the success fee and anywhere between a few hundred pounds to a few thousand pounds for the insurance. The insurance could be either an upfront cost or something additional taken at the end.
So is 25% plus the insurance the average?
Well many lawyers are actually taking more because the government have also reformed the fees that can be recovered in general as well. Road accident fees (which are fixed) were slashed by more than half, and fixed fees were also applied to most other types of cases which are in many cases a tenth of what we could recover before.
This means that it is not just about what fees we cannot recover but it is also about the fees that we can recover being shrunk considerably as well.
What this has led to is some lawyers charging additional fees that are not classed as the success fee to cover the difference of what we cannot recover now. In some cases you could be looking at overall deduction of 40% with some firms!
So how do I get the best deal?
Our funding arrangements are always prearranged with you and we never have any hidden or additional costs that a lot of law firms do. We don’t have to take 25% and we also don’t have to charge you for insurance. So call us now on 0800 634 7575 and let’s see whether we can save you potentially thousands of pounds!