This is always one of the first questions that we Personal Injury lawyers are asked by prospective new clients.
There are many myths circulating about legal fees including that it will be too expensive to claim, so we hope this article will clarify the position:-
Most injury claims are brought by clients who have signed Conditional Fee Agreements (CFAs) and taken out policies of After-the-Event Insurance (ATE).
This situation means that if a client does not succeed with a claim (subject to the rare exception I will mention later), then they will pay nothing at all for legal fees or their solicitors’ disbursements.
If they do recover compensation, then, firstly, under the terms of the CFA they will have to pay a success fee to their solicitor. The amount of the fee will depend on the percentage of the success fee in the CFA itself and the amount of work performed by the solicitor at the point when the claim is concluded. However, it will never be more than 25% of the amount of the compensation that the client receives and is often less.
If the claim includes an element of future loss (such as post-settlement wages, care or accommodation) then that part of the amount received is not included in the valuation for purposes of calculating the success fee. For example if a claim settled for 40k and 20k relates to future losses, then the maximum amount the solicitor will deduct is 25% of 20k, namely £5000.
Secondly, the client only pays the ATE insurance premium if they win the claim. The amount will vary from around £34 in straightforward road traffic cases to a few hundred pounds in a Fast-Track case (valued up to £25k) although premiums will be more in higher value and complicated cases.
Clients usually pay their success fees and ATE premiums out of the compensation they receive, so they don’t have to pay out of their personal funds.
Some fortunate clients have Legal Expenses Insurance (LEI) so do not need to enter into a CFA. Commonly found as additions to motor and house insurance policies, LEI policies ensure that, subject to terms and conditions, policyholders will not have to pay a success fee or an insurance premium if they win the case and still pay nothing if they don’t succeed. We always advise clients to check for LEI before we enter into a CFA with them.
Some clients may be covered by Trade Union funding which is similar to LEI if they or a member of their family is a member of a Union which offers such a scheme. Trade Union funding may work as in the CFA model in some cases.
In rarer cases, such as Criminal Injury Claims and those made to the Motor Insurers’ Bureau where the claimant has been injured by an untraced driver, Solicitors may enter into Contingency Fee or Damages-Based Agreements with clients so they are only paid if the claim succeeds, in which case, like many US lawyers, they receive a sum equivalent to a percentage of the compensation which the client receives. Common figures for these types of agreements are 25%, 33% and 40%.
Legal Aid is only available in Clinical Negligence claims where the client suffered injuries during childbirth, so is not really relevant to Personal Injury Claims.
The exception to all of the above is very rare, apparently occurring in around 0.4% of cases. This scenario applies only when the injured Claimant is found to have been “fundamentally dishonest”. That means that the Court has ruled that they have lied or been fraudulent about a substantial issue in the case – examples include cases where Claimants have been proved to have been working after the accident when they stated that they were unemployed, have greatly exaggerated the effects of their injuries, have lied about how or where they were injured or were not injured at all.
In those cases, the Claimants are usually ordered to pay all their own legal fees and those of the opponent and irrespective of whether they have a CFA or a LEI policy. Fortunately these cases are much rarer than insurance companies and some elements of the press would have us believe.
To summarise, an injury claim usually costs nothing if you lose and when you win, you may have to pay a success fee and an ATE premium or a percentage of your compensation, but nothing that is not deducted from your compensation.
Remember that in some cases (where clients have the benefit of LEI and some Trade Union schemes) you will pay nothing if you win.
It is often a good idea to speak with a solicitor that offers a free first interview before starting a Personal Injury claim as we do.
If you would like free advice about any type of claim, please call us on 0114 218 4000 or email our team at P.I.Dept@tayloremmet.co.uk