A lot has changed in the last few years. The way in which personal injury compensation claims are handled is very different, and they way in which legal fees can be recovered has been totally changed.
Because of the April 2013 reforms, solicitors are now taking percentage deductions for many cases – so HOW and WHY are we doing this?
First off – you can’t blame us!
Some people get angry when they are told by lawyers that they will face a percentage deduction if the claim is successful. A lot of people’s responses are things like:
- “Well that’s not fair! It’s my money, not yours!”
- “I thought everyone always got 100% of their claim? I’ve seen the adverts that say this for years!”
- “Why should I lose out and pay you some of my compensation?”
Now, whilst it is lawyers who are taking the deduction, you cannot blame us! Trust me, if we could still offer 100% compensation on all cases, we jolly well would! But sadly the government changed the rules meaning lawyers can no longer recover all of their fees from the other side.
In the past, access to justice rules meant that an innocent injured victim could claim their compensation and could recover their reasonable legal fees for having to pursue a case. So, because we could recover all of our fees from your opponent, you’d get all of your payout.
That’s fair, right?
Well the government beg to differ…
So what’s changed?
The government stopped lawyers being able to recover their Success Fee and the premium for After The Event Insurance from the other side. The Success Fee is a part of our costs that helps lawyers to fund no win, no fee cases as we do take a risk when dealing with them. If we don’t win, we don’t get paid, and you don’t pay us either. So we lose money!
But that Success Fee is no longer recoverable from the other side, and it can now be taken from your compensation – but it is capped at 25%. So no more than 25% from your payout can be deducted for this fee.
When it comes to the insurance we can offer to cover you without you having to actually pay a premium. Many lawyers will take upfront fees, additional percentages, or lump sum deductions if the claim is successful to cover this. We don’t have to – so you don’t need to worry about that with us.
Now, if stopping lawyers being able to recover all of their fees from the other side wasn’t bad enough, they also slashed the amounts we can still recover significantly. So the combination of less fees and not being able to recover all of the fees we need to fund a claim means we have no choice but to take a deduction in many cases.
Can’t lawyers just get less money?
It’s a total misconception that lawyers are money greedy ambulance chasers – these are tired clichés that the media love to throw out there time and time again. In reality, when you compare how much money law firms make to the insurers we claim from, it’s the insurers who are making the big bucks.
Pursuing a claim costs time and money. We incur professional fees in fighting for a claim, and these are the fees we need to recover. Running a law firm is a very expensive business as well. A lot of people often don’t appreciate how much this is and still have the outdated perceptions that lawyers make easy money from claims. But the reality is law firms are going under left right and centre…
In an ideal world the victim would keep all of their payout. But thanks to the government, that isn’t the case.
So what do I do?
You speak to a law firm who can offer you the best deal possible. Many will take at least 25% and have additional charges and deductions given that the fees we can still recover have been slashed as well. You can face losing up to half of your payout with some firms!
But we are happy to be competitive, so speak to us on 0800 634 75 75 for advice today.
