April 2013 saw some huge changes in the personal injury claiming world. We have the government and their buddies in the insurance industry to thank for it when they caved to pressure from the multi-billion pound insurance giants to stop accident victims being able to recover all of their legal fees from the insurers.
Not exactly fair now is it? Why should the victim have to pay to claim? Well, that’s what happens nowadays I’m afraid. But what you need to know about is that some firms are going to take more from you than you ought to be paying.
The Changes
The changes stopped lawyers being able to recover the Success Fee and the cost of a premium for a policy of After The Event Insurance. The Success Fee is all a part of Access to Justice rules, and the principle behind it is allowing people to claim on a No Win, No Fee basis. Let’s face it, if there was a risk of paying something if the claim is lost, most wouldn’t bother doing it. Unfortunately, in most cases, we only know if you have a claim by actually pursuing it.
The After The Event insurance covers you for the risk of paying things out like costs to the other side if we lost in a court battle, or to cover the costs of things we pay out for you that we cannot recover. An example might be the cost of an unusable medical report.
So now, you face a percentage deduction to cover the lawyer’s Success Fee, and perhaps an upfront payment or a further deduction for the insurance. You can’t blame the lawyers for now taking a cut – it’s the government who have stopped you being able to recover your legal fees, not us. In some cases it isn’t economical to be able to not charge you a deduction.
So how much should I expect to be charged?
Well if you have been offered a deduction of 35%, which I have been hearing from a few people lately, I have something to tell you – you’re being overcharged!
The maximum a lawyer can take to cover their Success Fee is 25%. The law caps it so you cannot lose more than 25% from your payout to cover the Success Fee. The insurance can range from a few hundred pounds to thousands of pounds.
So WHY are people trying to charge me 35% if it’s capped at 25%!!!???
That’s a very good question. Perhaps the additional 10% is to cover some other fees. Or, which is more likely, it’s to cover the costs of a useless claims management company or claims agent that is the middleman between you and the solicitor. In the past, solicitors (not us though!) would pay claims companies thousands of pounds in referral fees for claims. But when the law changed in April 2013, this was banned. So now, the only way they can make any money as an independent company is to charge you.
So why do I call them useless? Well, simply put, you do not need them. You can go to a lawyer directly and cut out the middleman claims company who cannot represent you or offer any comprehensive legal advice. All they do is just pass you to a law firm and they charge you for the courtesy of doing so. It’s mad!
The Golden Rules
So remember, you shouldn’t go with anyone looking to take more than 25% from you. In fact, we can, in some claims, still offer 100%. If we can’t, we can offer competitive deductions. But one thing is for certain – in most cases, we self insure you so you do not need to pay for insurance. At least that’s one thing less to worry about.
No upfront fees and no hidden deductions at the end of the claim. That’s what you want. Anyone offering you a 35% deduction should be avoided in my opinion – going elsewhere could save you a lot of money!
