No Win No Fee: How To Fund The Legal Cost of Your UK Road Accident Compensation Claim
Find out about the legal costs in making a compensation claim; how no win no fee agreements can allow you to claim without paying legal fees up front; the legal injury insurance policies you may not realise you already have in place that can fund your solicitor’s fees and other alternative ways of funding your claim.
What are the legal costs a now in no fee agreement might cover in making a compensation claim for personal injury?
Your legal costs are made up of two main parts:
1. Your Accident Solicitor’s Professional fees
Fees for the time spent by your injury lawyer working on your compensation claim. The amount will depend on the charge per hour known as the “charge rate”, which you should be notified of in writing at the beginning of your claim.
Sums of money that your accident solicitor makes no profit on and pays on your behalf, which include: expense to receive copies of your GP notes and money paid in court fees to start your claim.
Are there any legal costs other than your own accident lawyer’s you need to be careful of when making a compensation claim?
Yes – if you lose your claim in the United Kingdom then you will have to meet your own disbursements expense.
Don’t worry – read on to find out about insurance policies which will protect you from paying these costs.
Also – if your claim is found to be “fundamentally dishonest” or a significant part of your claim is found to be fundamentally dishonest – you will be responsible for paying the other side’s legal costs.
Fundamental dishonesty refers to claims that are either staged, fraudulent or are grossly exaggerated. They apply to the dishonest claimant, who is making a claim up to receive compensation wrongly.
What insurance policies might you already have in place to fund your legal costs so a no win no fee agreement may not be necessary?
Before instructing an injury solicitor you should check if you have a policy of insurance in place which will fund your legal costs in pursuing your compensation claim. This insurance is generally known as “legal protection cover”, but different insurers may use different terminology.
A policy which has legal protection cover will not only meet your solicitor’s legal costs, but typically also meet the opposition’s costs should you lose your claim.
You may not even be aware that you have this protection, so it is important that you check all your insurance policies including:
1. Motor vehicle insurance
To use a motor vehicle lawfully on a public road in the United Kingdom you must have a valid auto insurance policy, which can have as an optional extra legal protection cover. This cover will pay your legal cost in pursuing a claim for road traffic accident compensation (whether you are a passenger or a driver in the insured vehicle).
2. Household contents insurance
If you own or rent your home you will normally have some form of contents insurance, which will often have legal protection cover for any type of accident (except RTA’s) for all family members residing in your home.
3. Travel insurance
Travel insurance will often include protection for the legal cost in pursuing an accident you have whilst on holiday.
4. Bank accounts requiring an annual fee
Some banks will give you automatic legal protection cover, travel insurance, etc. when you pay an annual fee for the account. You might not be aware of this so it is helpful to check the standard terms and conditions.
5. Union membership
Quite often your union subs will cover access to a union solicitor free of charge. This is very different than receiving help from a union representative who is unlikely to be legally trained – if you have the cover try to speak to the union solicitor direct.
6. Personal accident insurance
When doing certain high risk events, such as martial arts, you will often have personal accident insurance. This may pay your legal fees or even your compensation, but you will need to check the policy wording carefully.
If you are uncertain as to whether you have legal protection cover – telephone your insurer’s helpline to confirm.
What should you do if you have legal protection insurance?
If you have legal protection insurance you should:
1. Tell your insurer of your accident as soon as possible
Your insurance policy will only allow you a short time, such as three months, to do this – so act quickly.
2. Your insurer will send you a claim form
You should complete and return this form. The policy may require you to use an insurance panel solicitor or you may be able to choose your own solicitor. If you are entitled to choose your own solicitor it is advisable to speak with that solicitor before returning the form.
3. Contact from an accident solicitor
The insurer’s chosen panel solicitor will contact you to discuss your claim.
If you have chosen your own solicitor – your insurer will write to that solicitor to seek a written opinion about the strength of your compensation claim.
4. Commencement of the compensation claims process
The panel solicitor decides you have a good compensation claim or the insurer accepts your chosen solicitor’s written opinion as to the strength of your case – your insurer will confirm authority that your legal costs in making a claim will be met
Sometimes you will have to pay the first £50 or so – known as your policy “excess”.
If no legal protection insurance is available how can you fund your legal costs as cheaply as possible?
A UK personal injury lawyer will often be prepared to have a free thirty minute discussion with you to decide about your potential compensation claim. This is known as a “free initial consultation”.
The consultation can take place at the accident lawyer’s office, on the telephone or sometimes the lawyer will even come to your home or the hospital.
During the consultation you can discuss your compensation claim and the cheapest ways to fund it, including:
1. No win no fee agreements
The technical name for a “no win no fee agreement” is a “conditional fee agreement” of CFA for short.
In this agreement your injury lawyer agrees not to charge you for his professional fees if he loses your case. If he wins your claim – he will charge his costs to the party at fault (the loser) with a percentage increase known as a “success fee”.
The law surrounding recovery of fees using a no win no fee agreement changed on the 1st April 2013. An agreement set up prior to the 1st April 2013 date would result in the losing party paying your solicitor’s fees, including the success fee (in the event you winning your claim). After this date – the law changed so that the losing party no longer had to pay all legal fees, so your solicitor became entitled to deduct up to 25% of your fees (including VAT) for unrecoverable legal costs.
The rules for no win no fee agreements vary across the UK. In England and Wales the rules are as described in this section, but in Scotland the availability and terms of no win no fee agreements can differ than England and Wales.
No win no fee agreements dated prior to the 1st April 2013: be careful to check with your lawyer that you will not have to pay any “shortfall” in legal costs. In UK law the loser of a legal claim has to pay the winner’s costs so long as they are reasonable – a “shortfall” is the difference between the amount of costs the loser pays compared to the amount of costs your accident solicitor has clocked up.
No win no fee agreements post 1st April 2013: be sure to agree the percentage deduction that can be made by your solicitor from your compensation in the event of success. This can be any percentage from 0% up to a maximum of 25% and should include VAT.
2. Disbursement funding for no win no fee agreements
Disbursements were described at the beginning of this page as expenses your personal injury lawyer has to pay out on your behalf.
Sometimes if you have a no win no fee agreement – your accident solicitor is prepared to meet the disbursements until the end of your claim and recover the expense from the loser if your claim is won. If your claim is lost you may have to pay these disbursements.
Disbursements funding is a type of insurance policy which will pay your disbursements if your claim is lost.
The cost of this insurance policy can normally be claimed from the person responsible for your accident if your claim is successful and can often be purchased on credit.
3. After the event legal insurance
The policy you take out after you have had your accident is known as “after the event insurance” or ATE insurance. It can cover your solicitor’s legal costs and the other side’s costs if your claim is unsuccessful.
This insurance can often be purchased on credit.
No Win No Fee & Solicitor Fees Funding Summary
You have discovered the legal costs you are at risk of paying in making your compensation claim as well as the cheapest ways of funding these costs, including no win no fee agreements.
Funding Your Road Accident Claim Next Steps
We recommend you see our article road traffic accident claims process to see all the steps to claiming road traffic accident compensation using a no win no fee legal funding agreement.