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Do I have to use 'no win no fee' when making a personal injury claim?

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When should an accident or disease be reported to the Health and Safety Executive?

As a new business advisor, I speak to clients daily and one of the questions I hear often is “do we have to do ‘no win no fee’?”

There seems to be a perception that there is a compensation culture perpetuated by no win no fee solicitors (and claims management companies cold calling asking if you’ve had an accident that wasn’t your fault). This makes people question whether agreeing to a ‘no win no fee’ arrangement is in some way a negative thing. However, I am confident that most of our clients who have been through the process to make a claim after suffering injuries, sometimes life changing, as a result of someone else’s negligence would say that ‘no win no fee’ is absolutely a positive arrangement and one which has allowed them to successfully recover compensation without incurring any upfront personal cost.

Some clients ask about Legal Aid but this was abolished for the vast majority of personal injury claims almost 20 years ago. Therefore, unless you have a legal expense insurance policy which covers personal injury claims, it is difficult to see how a personal injury claim would be viable without the use of a ‘no win no fee’ agreement (also known as a CFA or conditional fee agreement). The only other option is to pay privately and upfront, but we have not yet had any clients who would choose to pay a solicitor by the hour and pay for any medical reports etc. upfront, when a ‘no win no fee’ agreement is available instead. This would be very costly over a lengthy period and there would be no guarantee of getting this money back, as it is often difficult to say whether a claim has good prospects of success until significant (and costly) investigations have been made.

Since the days of Legal Aid and even the days of regular injury-related cold calls, the personal injury landscape has changed a lot. After a huge push from the insurance industry (with the promise of reduced insurance premiums, which has never materialised) referral fees paid to claims management companies and insurers to generate cases were outlawed and fixed legal costs were introduced for solicitors, which means they can only recover a set amount from the opponent in most personal injury cases. In addition to this, solicitors are no longer able to recover their success fees (an uplift to reflect the risk they take in funding the case) or the insurance premiums to cover disbursements from the opponent. As a result, claimants now have to pay their own success fees and insurance premiums as part of the ‘no win no fee’ arrangement. Compensations pay-outs were slightly uplifted at the same time to offset this cost to claimants.  Further, claimants don’t have to pay any of this until the end of the case when compensation is recovered and the amount which will be deducted from their compensation will always be capped at a certain percentage. If their case is unsuccessful, the success fee and insurance premium do not need to be paid.  

A further significant change within the industry has been the Whiplash Reforms in 2021, which mean that most low value road traffic accident claims are now subject to a set whiplash tariff (with significantly reduced compensation amounts payable) and claimants are encouraged to pursue compensation of up to £5,000 plus financial losses without any legal representation (as legal costs are no longer recoverable for cases below this amount). Again, this was driven by the insurance industry, yet insurance premiums continue to rise.

The reason ‘no win no fee’ agreements are so appealing for a claimant is that they allow you to continue being able to access justice with no upfront expense and very little risk, despite all of these changes within the industry. Unless you are found to be fundamentally dishonest or fail to comply with the terms of the agreement, your solicitor (or ATE Insurer) covers any costs or disbursements incurred, meaning that you don’t have to pay anything if you lose. Any sums you have to pay if you win will always be capped at a reasonable level, which is agreed at the outset. This offers great peace of mind to claimants who would otherwise worry about finding funds to cover heavy legal fees and allows them to continue seeking justice when they are injured through no fault of their own.  

If you are considering making a personal injury claim contact our new business advisors on 0161 696 6235 who can explain the funding options to you and answer any questions that you may have.

By Donna Wilkes, new business advisor