No-win no-fee agreements
Some legal jargon is used in the explanation below, so please see the section on Legal costs first. Please also see the section at the bottom dealing with Other methods of funding.
Conditional Fee Agreement (CFA)
The CFA is the no-win no-fee agreement. This only covers the solicitor’s legal costs and not the disbursements, barrister’s fees or defendant’s costs.
If you lose you do not pay your solicitor’s costs. If you win you do pay your solicitor’s costs but this is subject to the indemnity principle.
With these agreements the solicitor is taking on the risk of doing the work and not getting paid for it. To counteract the risk the solicitor can charge a success fee.
Success fee
The success fee is expressed as a percentage of the profit costs. For example, if the value of the work done is £5,000 a 100% success fee means that the client has to pay an additional £5,000. A 50% success fee means £2,500, and so on.
For cases involving injury the amount of the success fee is capped. The maximum that can deducted is 25% of the compensation that is received (future losses are not included in the calculation). For example:
If in a simple case the compensation is £10,000 with profit costs of £5,000 and a success fee of 100% - the success fee is £5,000 but the most that can be deducted is £2,500 i.e. 25%. If the compensation was £100,000 then the full success fee can be deducted as it is less than 25%.
Every claim has risk, even those that are admitted or are certain to win. The risk comes from the offers that can be made and also because some cases fail down the line or it is found that the claimant has not been honest. Thankfully that is rare.
Each case is assessed on its own merits before a success fee percentage is given. We normally prefer to work via the cap instead, so instead of leaving it at 25% we may reduce it for those cases where we think the claim will win.
Note however that medical negligence claims are always considered as high risk. Perhaps 1.5 out of 10 succeed so that means that for the 8.5 out of 10 that fail, the work is all wasted. This means that such cases mostly involve a 100% success fee and 25% cap. We may adjust this down in the rare circumstances where this is justified, for example if the health professional concerned has already accepted that they breached their duty of care and caused damage.
To offset the blow of the success fee, for injury and medical negligence cases we also fund the disbursements of the claims so that clients do not have to dip into their own pockets throughout the life of the claim. We also normally waive the additional costs that can be claimed from clients over and above the costs paid by a defendant.
For the majority of the injury and medical negligence claims we also ask barristers to work under a CFA.
After the event insurance (ATE)
ATE in injury and medical negligence claims covers the disbursements of a case and also some of the legal costs risks that can arise.
With the ATE product that we normally recommend (we are not connected in any way with any insurer we may use) there is always a premium to be paid. Below is a breakdown of what happens:
Injury claims
If the claim fails, the ATE premium is not paid but the insurance pays for any disbursements that have been incurred.
If the claim wins, the client pays the insurance premium from their compensation. The actual amount changes depending on the type and value of the claim.
Medical negligence claims
The ATE premium is split into two parts. One part deals with breach of duty (liability) and causation. The second part deals with damage and any other disbursements. What happens is:
If the claim fails, the ATE premium is not paid but the insurance pays for any disbursements that have been incurred.
If the claim wins, the defendant pays the first part of the premium. The client pays the second part of the premium from their compensation.
The amount of the premium depends on the value of the claim and the stage at which the case ends.
Other methods of funding
These can include legal cover attached to home or car insurance, trade union benefits or even private funding.
If such methods exist, they should be used ahead of a CFA supported by ATE. This is because the cover may be enough, and if it is used and the claim succeeds the client can avoid having to pay a success fee or ATE premium.
It may be that the legal cover is limited and that a CFA and ATE is also needed because the legal costs and disbursements will be considerable. Legal cover for £25,000 would only just cover the cost of 3 experts attending a 3 day trial, and nothing else.
For medical negligence cases, if a client has legal cover but decides not to use it, they may have to pay all of the ATE premium and not just the second part. This can add £2,000 or more to their bill.
Note however that often trade union membership benefits may only cover an initial telephone conversation for medical negligence claims, and if the claim is then taken on it may have to be using a CFA and ATE.
When considering other methods of funding you should also consider Freedom of choice.
Call us on 01270 509800 or 01353 865 333. If you would prefer us to call you, complete our online enquiry form.