>

Personal injury claim funding

Frequently Asked Questions (FAQs)

Q1 - Will I have to contribute towards 1ST CENTRAL Law’s fees?
A - You won’t have to pay anything up front, whatever happens. If you have the benefit of Legal Expenses insurance within your motor insurance policy, then subject to the reasons given in question 7 below, you won’t have to pay a penny towards legal costs whether you win or lose the case. If you don't have the benefit of Legal Expenses insurance, then your case will be pursued on a "no win, no fee" basis, and you would then need to make a contribution to our legal fees at the conclusion of the case. This contribution will be payable out of your compensation figure, but it is limited to only certain parts of your compensation award (see below). From 1st April 2013, the amount of compensation received for personal injury (general damages) has increased by 10%, and this increase will help with any contribution you make towards legal costs. It’s therefore still well worthwhile bringing a claim.

Q2 - How much will I have to contribute towards 1ST CENTRAL Law’s fees?
A - If you win your claim, there are two types of contribution you may make under a "no win, no fee" funding agreement. Firstly, you might have to pay our “base costs” (i.e. our normal fees), and secondly, you may have to pay a “success fee” (see Q5 below). The success fee is limited by law; the base costs are not limited by the law, but in practice our policy is to limit the combination of the two so that you are almost certain to walk away with 75% or more of your compensation if you win. Any contribution is paid out at the end of the case.

In addition to this, if you have chosen to buy the optional After the Event (ATE) Legal Expenses insurance, then you will usually have to pay the cost of this policy from your compensation at the end of the case.  You don’t have to take out that insurance if you don’t want to, but your compensation may be at risk if you don’t have it (see below).

Q3 - Why should I contribute to my own legal fees if my claim is successful?
A - Before 1st April 2013, claimants (the person bringing the claim) generally received all of their compensation after the legal costs had been resolved. The law was changed in 2013, which meant that success fees and the After the Event insurance premiums were no longer recoverable from the losing defendant, and had to be paid by the successful claimant. These changes were made despite protests and even attempted legal action by claimant representative groups, who argued that the changes were very unfair. The government pushed on regardless, and these funding rules apply to all claims that began from 1st April 2013 onwards.

Q4 - How do "No win, no fee" or "CFA" (Conditional Fee Agreements) work?
A - In summary, you agree to pay some fees (known as "base costs") to your solicitor, but your solicitor agrees to waive those fees if your claim fails despite your best efforts. To reflect the risk of the solicitor not getting paid, you also agree a "success fee" which is only payable if you win. The success fee is a percentage of the base costs, but it is capped at no more than 25% of the compensation you recover.

Q5 - How are the base costs and success fee calculated?
A - Solicitors calculate their fees in various ways. Here at 1ST CENTRAL Law, we work on the basis of an hourly rate for the base costs and a success fee of up to 100%. Both the base costs and success fee are only payable if your claim is successful, and in any event, the success fee is capped (see above and below). We should make it clear that other solicitors might charge in different ways. Some may not charge a success fee at all, and if they do it may be less than 100% of the base costs. We do charge a 100% success fee, but this is in part because we are an established firm of specialist solicitors who will deliver a high-quality and professional service to you, and will make the very best efforts to get you the maximum compensation possible. Moreover, we will limit our fees so that no more than 25% of your compensation is deducted towards these fees. Some other solicitors' firms may not do this.

Q6 - How are my contributions (paid from damages at the end) calculated?
A - By law, the sum you pay towards your success fee cannot (in broad terms) exceed 25% of the value of your damages, excluding any claim for future losses. This means that the success fee is linked to your compensation. Our base costs are not linked to the compensation in this way, but our track record shows that when the base costs and success fees are added together, we have never taken more than 25% of a personal injury claimant’s compensation towards our legal fees.

Q7 - Will I have anything else to pay if my personal injury claim succeeds?
A - There are circumstances in which claimants have to pay something towards the other party’s legal costs, even if compensation has been awarded. This could happen if the other side makes a formal "Part 36 offer” which is then rejected by you, but which is subsequently shown to have been a good offer. If this were to happen, then you may have to pay the other side’s legal costs from the date shortly after the offer was made. Those costs are generally limited to the value of your compensation, so although your compensation may be used up towards these legal costs, you would never end up having to pay anything more. An exception to this would be if your claim was shown to be dishonest or fraudulent; in which case, you could be ordered to pay further legal costs.  However, legal costs ordered against our clients are rare, as we give our clients clear advice about when to accept and when to reject offers.

Q8 - Can I protect myself against potentially losing my damages through a Part 36 offer?
A – If you don’t happen to already have Legal Expenses insurance under your motor insurance policy that covers this risk, then you can purchase an After the Event (ATE) policy that will protect you as long as you provide honest and reasonable instructions. The cost of this policy is not recoverable from the other side, and as such, you would need to pay for it out of your own compensation. This would be separate to any contribution you make towards our own fees, and may mean that you'll recover slightly less than 75% of your damages if you did purchase an ATE policy. The cost of the policy is normally just over £100. You don't have to take out this insurance, but if you don't then your compensation may be at risk from such offers.

Q9 - Will I have to pay anything else if my claim does not succeed? 
A - Not unless your claim was dismissed by the court (struck out) or shown to be dishonest or fraudulent.  In these circumstances you could be ordered to pay all of the other side’s legal costs. This is very unlikely.

Q10 - What do I do if I still have a query about the funding of my claim?
A - Please call or email the person dealing with you claim (quoting your claim reference number), and they will discuss your query with you personally.

Technical information

Legal Aid, Sentencing and Punishment of Offenders Act 2012 - these changes include the following:

  • Prohibited referral fees in prescribed circumstances. [sections 56 - 60 LASPO 2012]
  • Ended the recoverability of success fees in Conditional Fee Agreements, for most personal injury claimants (excluding mesothelioma claims) [section 44 of LASPO 2012]
  • Ended the recoverability of After The Event (ATE) insurance premiums for most personal injury claimants (excluding mesothelioma claims) [section 46 of LASPO 2012]

 

The Civil Procedure (Amendment) Rules 2013 (and the 60th update - Practice Direction Amendments) - these changes include the following:

  • The amount of fees that the claimant can recover from the other side in low-value RTA claims were reduced from 30th April 2013, and further changes and reductions for other types and values of claims were applied from the end of July 2013. This means that more claimants face an increased liability for the shortfall in their own recovered costs.
  • Qualified One-Way Costs Shifting - means that in personal injury claims, the claimant doesn't have to pay the other side's costs of the claim if it's not successful. There are significant exceptions to this which include:
    • Where the claimant fails to beat the other side's Part 36 offer (the contribution can't exceed the damages awarded plus interest, but the damages will be applied in the first instance to discharge the contribution to the other side's awarded costs)
    • If the claim is struck out for being without merit, or for conduct reasons
    • If the claim is determined to be "fundamentally dishonest"
    • If the claimant beats his own Part 36 offer, then he will receive a 10% uplift on the actual award (with a sliding scale for awards exceeding £500k)

 

Simmons v Castle [2012] EWCA Civ 1039

  • This Court of Appeal decision means that awards for personal injury (general damages) from 1st April 2013 onwards increased by 10% where the claimant has instructed his lawyer on a CFA after 1st April 2013.