Injury Cases – 7 Tips to Ensure you are not Overcharged when Fees are Deducted
Since April 2013 solicitors have been able, when conducting your case on a "no win no fee" agreement, to deduct a "success fee" from your compensation claim when the case is concluded. This can be up to a maximum of 25% of your damages. This fee is in addition to the fees that the solicitor will already have received from your opponent and is intended to reflect the risk that, if your case had not been successful, your solicitors would have been paid nothing at all.
You may also be required to pay, or agree to have deducted from your damages at the end of the case, a premium for "after the event" insurance, the purpose of which is to protect you against the risk of having to pay the other side's costs if something goes wrong. The premium can be anything from £26 to several hundreds of pounds.
In the worst case scenarios a client who recovers £2,000 in compensation might only actually receive around £1,100 after the "success fee" and premium have been deducted.
You can minimise this shortfall from your compensation by following our top tips –
Before Instructing Your SolicitorsWe've set out more detail on each point below
1. Check for legal expenses insurance
2. Read the "no win no fee" agreement - how are "base costs" calculated?
3. Check the level of success fee proposed
4. Ask if "after the event" insurance is really necessary in your case
When Your Compensation is Paid
5. Ask for a copy of your bill
6. Check the calculation of your success fee
7. Act quickly, because there are time limits
When Instructing Your Solicitor
1. First of all, check carefully to see if you have any legal expenses insurance attached to your household or motor insurance policies. You may even have legal expense insurance attached to a credit card, or as part of your trade union membership. If you do then it is likely that your insurance will cover your legal fees for your claim in full, so you will have nothing at all deducted from your compensation. Many legal expenses insurers will insist that you use solicitors that they have a special deal with, who might be miles away from you. Don't let that put you off though. For most modest cases your insurers solicitors will be able to conduct your case just as effectively as someone closer to home, and you could save hundreds or even thousands of pounds.
2.Look carefully at the "no win, no fee" agreement that you are asked to sign. It might also be referred to by its technical name which is a Conditional Fee Agreement. Check how the solicitors propose to calculate their "base costs". For a modest case (which includes most road traffic accidents, slipping cases and employment cases) the hourly rates that they charge should be between around £111 and £121 per hour for junior lawyers and £201 to £267 for senior lawyers. If they are higher than this, or if one high rate is charged all lawyers no matter how experienced, then alarm bells should start ringing. This is because, although in most cases you do not pay anything towards their "base costs", it is on these base costs that the "success fee" is calculated, so they will have a big impact on what is deducted from your damages. If the rates seem high, ask for an explanation. If you are not satisfied then you can always shop around for someone with a better deal.
3.Check the level of success fee that they are proposing, which will be shown as a percentage. This percentage should reflect the level of risk of them not being paid, which basically means the risk of them not recovering any compensation for you. If your accident circumstances were straight forward (for example if you were in a car accident where someone drove into the rear of your car, or if you were a passenger in a car) then the success fee should be in the region of 5 – 15%. If it is higher than that, you should ask for an explanation. Bear in mind that a success fee of 100% is only applicable to cases that have a 50/50 chance of success.
4.Ask whether "After the Event" insurance is really necessary in your case. In most cases it is simply not needed at all until the point that court proceedings are issued. If your solicitors insist on you taking out a policy in order for them to take on your case, then unless they can give you a really good explanation as to why it is necessary in your particular case, then you should probably look elsewhere. If a policy is needed then bear in mind that you could buy the same or similar product direct from the insurers for as little as £26. If you are being asked to pay significantly more than that, then insist that your solicitors do a little shopping around.
When Your Compensation is Paid
5.Ask for a copy of your bill. The bill should show all of your solicitor's fees and not just the amounts that have been deducted for success fees and insurance premium. You have an absolute right to see this, even though parts of your fees may have been paid by your opponent. The bill should be in the form of a VAT invoice, or a series of VAT invoices. Do not accept anything else.
6.The invoice or invoices should show the "base costs" and "success fee" separately. Check that the success fee is the correct percentage of the base costs. So if your "base costs" are shown as £500 and your success fee (as set out in the "no win, no fee" agreement") was 10% then your success fee should be £50 plus VAT. If your success fee is more than that then, even if it is no more than 25% of your damages, you have been overcharged and have a right to complain and can obtain a refund.
7.If you are unhappy with the overall amount deducted, you must act straight away, because there are strict time limits that apply.
If you have been overcharged however and your solicitors refuse to refund you then we can act for you on a "no win, no fee" agreement and, if we are successful, we recover our fees from your solicitors and we do not charge you any success fee at all!