When I first started practicing as a solicitor in Durham back in 1989 legal aid was still available to fund personal injury claims and quite a lot of the claims I dealt with during my first years as a personal injury solicitor were funded in this way.
The rules then changed and legal aid was no longer available for personal injury claims. With the removal of legal aid a new form of funding was introduced. The new funding concept was the introduction of what is now known as a Conditional Fee Agreement but which have become known by the public as “no win no fee agreements”.
The concept was quite simple, a solicitor could pursue a claim for a client on the basis that if the claim was unsuccessful then the client did not have to pay the solicitors costs.
In the early days of this new system, as the solicitor would be acting on a basis where they may not recover any costs if the claim was unsuccessful, the agreement would include a fee payable if the claim was successful. The success fee was an additional percentage of their costs that was paid by the client out of their damages in a successful case. The idea being that the solicitor would be compensated for those cases that were unsuccessful by the success fees in successful cases.
An example would be that if there was a 25% success fee and the solicitor recovered £1,000 of costs from the other side in a successful case then their client would be obliged to pay the solicitor a success fee of £250 out of their damages.
However, the system was later changed so that the success fee along with the solicitors costs and the client’s disbursements (things such as medical report fees, engineers report fees, court fees etc.) would be recovered from the other side in successful cases meaning the client gained 100% of their claim compensation.
This is now all about to change again. Under the new rules that come into effect in April 2013 the success fee under a conditional fee agreement will no longer be recoverable from the other side. If a client has a conditional fee agreement with their solicitor that includes a success fee then the client will be obliged to pay the success fee out of their damages.
Over the years the public have become used to a system where win or lose pursuing a claim costs them nothing but this may well change after April 2013 in successful cases.
What is the real implication of this change for clients? I suspect that in straight forward cases where liability is unlikely to be disputed, solicitors may well be prepared to enter into conditional fee agreements with their clients that do not include a success fee. Therefore the client will continue to receive their damages in full.
I suspect that where a client’s case is unusual, complex or where liability is likely to be disputed a solicitor will be less likely to take the case on under a conditional fee agreement without a success fee. In particular where anther solicitor has declined to take on a case then it is even more unlikely that a solicitor who is prepared to take the case on will do so without a conditional fee agreement with a success fee.
The net result will be that where a conditional fee agreement is the only way in which a claim can be funded then clients will find that solicitors will be much more cautious in deciding which cases they will take on without a success fee. For the first time in many years some client’s will be faced with having to pay something out of their damages to their solicitor if they are successful in a less than straight forward case.
Interestingly, I remember that when conditional fee agreements were first introduced clients had no objection to a part of their damages being paid to their solicitor by way of a success fee. However the current system has been around for many years and people have become accustomed to the success fee being paid by the other side so they receive their damages in full. It will be interesting to see how people react to the new regime and the erosion of the concept that in a successful case the client necessarily receives 100% of their damages.
I understand that the forthcoming changes may be confusing. If you have any questions at all about the new rules and how they may affect the compensation you receive, I would be delighted to take your call. Please call our Durham office on 0191 3753938
Ian Wanstall – Contact me at firstname.lastname@example.org
Wanstalls Solicitors are based in County Durham in the North East of England. We represent clients both locally and nationwide and offer a friendly personalised service. If you would like to discuss any aspect of a personal injury claim, we would be delighted to hear from you.