Catastrophic injury claims: How does my solicitor get paid?

When someone suffers a serious injury in an accident that was not their fault, there are a number of different ways to fund your case, the most common of which is a no win, no fee agreement.

What is a No Win, No Fee Agreement?

Conditional Fee Agreements (CFA) commonly known as no win, no fee agreements are an agreement between client and solicitor, which sets out how your solicitor will be paid for the legal work they undertake on your behalf.  In basic terms, if your claim for compensation following injury is unsuccessful, you will not be liable to pay a fee for the work your solicitor has done on your behalf.

Your solicitor will likely take out an insurance policy, known as an after the event policy (ATE) which will cover your costs such as court fees, medical report fees and your defendants’ legal costs, in the event that your claim is unsuccessful.

What if my case is successful?

If your claim for compensation is successful, the majority of legal costs and disbursements incurred will be recovered on conclusion of your case from the defendants.  It is important to note though that there are certain costs that you may be liable to have deducted from the compensation awarded to you.  These costs will be deducted by your solicitor before funds are paid over to you.

ATE premium

If an ATE policy has been taken out on your behalf, you will be liable to pay this premium on successful conclusion of your claim.  The amount of the premium will be explained to you when you enter into the CFA with your law firm.

Success fee

Some, but not all, law firms will charge a success fee, which is a percentage of your lawyers’ costs (not your compensation).  However, it will be capped at a percentage, often 25%, of the compensation you receive for injury and past losses.  A success fee reflects the risk your lawyer takes that your claim may not be successful, in which case they would not have received any legal fees. 

By way of example, your lawyer may set a success fee of 50%, capped at 25% of your net damages.  Your case settles for £100,000 and of this, the amount for your injury and past losses is £50,000 and your lawyers’ costs are £60,000. In addition, your lawyers are entitled under the terms of the CFA to a success fee of £30,000 (50% of their costs). 

Your lawyers’ basic costs of £60,000 will be recoverable from the defendant, but the success fee is deductible from your compensation.  However, as the amount for your injury and past losses is £50,000, the success fee would be capped at 25% of £50,000, ie £12,500.  This means you would receive £87,500 in compensation and your solicitor would take a success fee of £12,500.

Success fees are not charged in all cases, nor by all law firms, so it is important before instructing a solicitor to ask them about their charges to be sure you are making an informed decision before instructing any law firm.

Shortfalls

Some law firms, but again not all, may also ask you to cover the cost of the balance of any expenses not recovered from the defendant.  These are known commonly as shortfalls. 

Examples of shortfalls may be:

• Solicitor’s costs.  Your CFA will set out the hourly rate charged by your solicitor.  At the successful conclusion of your claim, your solicitor will submit to the defendants a detailed bill of costs for assessment.  It is not uncommon for the defendants to try to reduce your solicitors’ fees, and they may argue that the hourly rate is too high.  This can occur when, for example, you live in Plymouth but choose to instruct a London based solicitor, who will have a higher hourly rate than a local solicitor based in Devon may have had.  Discussions will take place between the two sides, and it may be agreed that the hourly rate the defendant will pay, is less than the hourly rate set out in your CFA.  Your solicitor may therefore charge you the difference between the rate agreed with the defendants, and the rate within your CFA.
• Travel costs. Fees may have been incurred which are rejected by the Defendants during cost negotiations.  These could include by way of example, if you have requested your solicitor attend in person for all meetings rather than do them via telephone or video call.  The defendants may argue that it was not necessary for these meetings to take place in person and not therefore reimburse your solicitors travel costs for these meetings.  In these circumstances your solicitor may charge you for their travel costs as you had specifically requested in person meetings only.
• Counsels Fees. It is likely that at some point in a high value case, the opinion of a barrister will be sought on a matter of law, or for their opinion on the prospects of your claim being a success, for example once medical evidence is obtained.  Your barristers’ fees will also be assessed as part of the detailed bill of costs, and the defendants may negotiate so that they are not liable to pay the entire barristers fees.  In this case, your solicitor may charge you the shortfall between what your barristers total fee was, and the amount the defendants agreed to pay.

It is important to note that not all law firms charge shortfalls, and you should seek clarity from your solicitor before instructing as to whether you will be responsible for any shortfalls.

Other important terms to note

Your CFA will set out certain obligations that you must fulfil.  These will include, but may not be limited to, providing instructions to your solicitor.  If partway through your claim you decide that, for some reason, you wish to discontinue the claim, you may be liable for costs incurred by both your solicitor and the defendants legal team, as you may be in breach of the terms of your CFA. 

If it is found that you have exaggerated or provided misleading information about any aspect of your claim, this will also constitute a breach of your CFA and again you may be liable for the costs of both your legal team and that of your defendant.  It is vitally important to be completely honest with your solicitor about your injuries and the circumstances surrounding how they were incurred, and if you are unsure or cannot remember any information being requested, to make your solicitor aware of this.

How we can help

Major Trauma Group is a not-for-profit community interest company.  By contacting us, we can connect you to our member firms who are all experienced in dealing with serious injury claims.  In many cases they will be able to deal under a no win no fee agreement. 

If you would like a free, no obligation, initial chat, please email us at hello@majortraumagroup.co.uk and we will arrange for a specialist serious injury lawyer to call you at a convenient time.