Personal Injury – The Conditional Fee Agreements Order 2013
Up to the 1st April 2013 if you sign a no win no fee agreement with a client then the law does permit your solicitor at the end of a matter to recover not only their normal charges based on an hourly rate from your opponent but the success fee they charge for winning the case and an insurance policy they have taken out to protect you from paying your opponent’s costs if you were ordered to pay them if the case was unsuccessful.
The Conditional Fee Agreements Order 2013 comes into force on the 1st April 2013. The agreement provides that it is between a client and their representative to agree the level of the success fee. However the success fee cannot be anymore than a percentage of 100%. The success fee in respect of a personal injury claim shall be limited to a maximum of 25% of the damages awarded for pain and suffering and loss of amenity and financial loss other than future financial loss and any sums recoverable by the Compensation Recovery Unit including VAT.
Therefore the Regulations provide that the amount of the solicitor’s success fee should not exceed 25% of the damages awarded for pain and suffering and loss of enjoyment of life together with other items such as loss of earnings, medical expenses. However in assessing the 25% cap on the success fee you should disregard future loss of earnings and future losses including any amount due to the Compensation Recovery Unit.
The Regulations do have some exemptions. They do not apply to claims for damages in respect of diffuse mesothelioma proceedings.
The premiums paid for insurance to insure you against the cost of paying the legal fees of the other party are no longer recoverable from the other party if you win the case.
It is therefore no longer the case that the loser pays the winner’s bill in full.
Qualified one way cost shifting
The rules that come into force on the 1st April provide in general terms that inspect of personal injury claims which includes claims arising out of death or personal injury the Claimant shall not be liable to pay the Defendant’s costs subject to the following;
If you win your case and receive an award of compensation but fail to beat the Defendant’s part 36 offer or for some other reason you are ordered to pay the legal costs of the case the damages you are awarded can be used to pay your opponent’s costs.
The Court may give permission to enforce the cost order against you if;
a) You have disclosed no reasonable grounds for bringing the claim
b) The proceedings you bring are a abuse of the Court process
c) Your conduct or the conduct of the person acting for you with your knowledge is likely to obstruct the just disposal of the proceedings. If it is found in the claim on the balance of probabilities that the claim was fundamentally dishonest.
It is quite apparent from the above that there is still a risk that a Claimant would be liable to pay the opponent’s costs if they lost the case.
Whilst insurance policies are not recoverable of the claim for costs and would therefore be an expense for the Claimant to pay presumably out of his/her damages it may still be wise to insure against the residual risk.
The real danger areas are pursuing claims where there are no reasonable grounds for bringing the claim. If you were to employ a non personal injury specialist who pursued a claim that was thrown out by the Court because the claim did not have sufficient merit then you could end up footing a substantial legal bill for the insurer’s solicitor. It would always therefore be wise to take advice from a specialist in personal injury before you embark upon a claim.
Please note this document is for information purposes only and should not be relied upon for the purpose of taking legal advice or in any Court proceedings. You should take legal advice on any case before proceeding
Senior Litigator member of the Association of Personal Injury Lawyers