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The worry that legal representation will be expensive sometimes puts people off seeking the services of a solicitor to pursue their claim for personal injury compensation. But worry not, the reason that ‘no win no fee’ services are in place for matters like Personal Injury compensation claims is to ensure that people who cannot afford the cost of solicitor fees still have the ability to use the legal services of a specialist Solicitor to pursue their claim.
When answering the question as to how no win, no fee works, the phrase ‘conditional fee agreement’ arises. Conditional fee agreements is the official term for no win no fee.
When pursuing legal action, there are many different options as to how the costs of the legal services can be funded. In matters of personal injury compensation claims, it is usually possible to enter into a conditional fee agreement which means the solicitor will charge you nothing if you lose and charge the majority of your costs to the 3rd party should you win. You will also be able to take out some form of legal expenses insurance, which will cover the costs of the 3rd party should you lose your claim – as long as you behave honestly, cooperatively and don’t do anything stupid like try to make a fraudulent claim.
You should be aware that not all solicitor firms will offer conditional fee agreements and that it is not always possible to use such an agreement with all types of claims. However, with the Direct2Compensation claims process, CFA agreements are available with all personal injury claims, from road traffic accident claims through to slip and trip claims.
How a conditional fee agreement (CFA) works
In summary, a CFA is an agreement which states that a claimant’s legal fees will only become payable should the claimant win their claim. By offering conditional fee agreement services, a claims management company or solicitor is taking the risk that they will not receive any payment for their work. The risk can be explained as follows: a solicitor agrees to run a claim for personal injury compensation for a client. They evaluate the claim and decide whether or not the prospects of succeeding with the claim outweigh the prospects of failing. If the solicitor feels that they are more likely to win than lose, they will agree to running the claim on a CFA basis. If they win, they can then charge their fees to the losing side. However, if they lose, they will not receive a penny for the hours of work that they have undertaken. Given the risks faced by the Solicitor, it is only fair and right that they should receive a decent return should they win the claim. To this end, since April 2013 when the system was changed by the Government post the Jackson/LASPO act, Solicitors now work on a fixed fees basis where the insurers of the 3rd party only pay a lower fixed fee if they lose. Therefore, where Solicitors also used to be able to charge the losing insurer a ‘success fee’ they no longer can and therefore, within Personal Injury Compensation CFA paperwork there is a fee payable by claimants should they succeed with their claim. To this end, should a claimant win their claim, they will face a deduction of up to 25% of any settlement awarded to them along with paying for any ATE insurance cover put in place by the acting Solicitor as the Government decided (after much lobbying from the Insurance sector) that winning claimants should be making a contribution to the costs of their legal services. The deduction cannot be more than 25% of the total settlement value (including any award made for special damages) along with the ATE premium which typically range from £150-£250.
In cases of personal injury compensation claims, the usual process is that the party that loses the claim has to pay the costs of the successful party, which will be fixed as per the new post April 2013 system as well as some disbursement costs. The claimants now make a contribution – but only if they win, as stated in the previous paragraph.
Should the claim end up in the courts, the awarding of costs is for the judge to decide. As such you may win your case but still be liable for some of the costs of the claim. This would usually apply if the claimant was at fault in some way for some or all of the incident in which they were injured. If a claimant loses their claim at the court, they will not usually be liable for their own costs, but will then have liability for the costs of the winning party. However, when claiming via the specialist personal injury Solicitors with whom Direct2Compensation work, you will not personally be liable for the costs as your solicitor will already have insured you against such risks. It is important to note that you would not pay any cost for any ATE premium should your claim fail.
Legal expenses insurance and your CFA
As previously stated, claims for personal injury compensation that are pursued on a conditional fee agreement basis are not risk free. Despite the best efforts of your solicitor to properly evaluate your claim, there is always a risk that the claim could fail – even in what seems a watertight matter. Therefore, your solicitor will take steps to protect you and them from the risks of losing and paying costs and take out legal expenses insurance to limit your exposure.
Many people are already covered for certain legal expenses by an existing insurance policy that they already have. This could be legal expenses cover on an existing home or car insurance policy. This is known as ‘before the event’ insurance (BTE). Therefore, when instructing your solicitor, you will be asked to check your existing insurance policies to see if you are covered. If you do have cover, it is wise to use it rather than seek alternative ATE cover as you cannot recover the cost of an ATE insurance policy if you win your claim – although you’ll not pay for it should your claim fail.
If you are not already covered under an existing policy, your personal injury compensation solicitor will organise ‘after the event insurance’ for you. This is likely to be referred to as ‘ATE insurance’. Put simply ATE insurance is a policy which is taken out after legal proceedings have either commenced or will be commence. The ATE covers losses which may be incurred as a result of the legal dispute or claim.
It is usual for your solicitor to arrange the cover for you and to ensure that you are adequately protected and properly advised. All of the solicitors working on personal injury compensation claims for the clients of Direct2Compensation will do this for you and ensure your piece of mind. Your solicitor will pay the premium due for the insurance policy and you will not be liable for the cost unless your claim is won.
The benefits of using a Conditional Fee Agreement
The main benefit of instructing a solicitor under the agreement of a CFA as a means of funding your claim for personal injury compensation, is that you will not be liable for the costs of the claim should you lose. Also, it means that the 3rd party will make a contribution (significant one at that) to your legal costs should you win. Of course, it is not possible to know how much your settlement will be until a detailed medical report has been obtained and a full understanding of your injuries and losses is in place. Also, it is not possible to know what your total contribution to your costs will be until your claim is settled. However, you can rest assured that we and any specialist Solicitor with whom we place your claim will only pursue a claim if it is in your best interests to do so and that the benefit to you of any settlement you receive should your claim succeed will far outweigh the cost you may face for the 25% contribution or any ATE premium fee.
If you have any questions about making a claim for personal injury compensation, or simply want further explanations as to how the process works, please contact us for assistance.