If a client is successful with their claim and recovers damages, the other party (the loser) would have to pay our normal fees (base costs). How much these costs come to will depend on how much time we spend on the case, for example, attendances with the client, making telephone calls, writing letters, etc. In some cases, the costs payable are fixed.
Since April 2013, a client is no longer able to recover either our firm’s “success fee” or insurance premium from the other party. These will now have to be paid by the client from their agreed damages.
There are two elements to the deduction from damages:
- A “success fee” to cover us for the risk of losing a client’s case and being paid nothing – this will not exceed 25% of the total compensation awarded to them, excluding damages for future care and loss.
- In some cases, a premium for insurance to cover a client against the risk of having to pay the other side’s legal fees or their expert fees and expenses (called ‘ATE Insurance’).
When we act on a no win no fee basis, we are not paid for work we do on cases which we do not win. Therefore, in order to break even, we need to charge an extra fee in the cases which we do win (a ‘success fee’). This fee is not payable by the other side and is deducted from the client’s compensation.
The success fee is a percentage uplift on our normal fees or base costs to cover us for the cases we lose. The success fee is limited to 100% of our ‘base costs’ on that particular matter.
We guarantee that the success fee will not exceed one-quarter or 25% of a client’s compensation including VAT.
In some cases (the more risky ones), insurance – known as After the Event or ATE Insurance – will be taken out for a client. The insurance policy covers two risks:
- Experts are not allowed to act on no win no fee basis, so their fees, Court fees and other expenses are payable, win or lose. We will fund the experts’ fees and other expenses. If your claim is successful, these expenses will be paid by the other side. If unsuccessful, the insurance pays these fees and expenses for you, but not our charges.
- If you reject a formal offer of settlement (described by lawyers as a ‘Part 36’ offer) and a Judge awards you the same amount or less, the normal rule is that you have to pay the other side’s costs from the date when you should have accepted the offer (usually 21 days after it has been received). However, if we advised the client to reject the offer, then the insurance will pay the other side’s costs for you in this scenario.
Remember: the success fee payable by a client will not exceed 25% of the compensation awarded to them in the event of them succeeding with their claim. In addition, they may also have to pay some or all of an insurance premium from their agreed damages, but only if they win their case. If they lose, they pay nothing.
We are acting for two clients, one of whom is successful with their personal injury claim and the other is unsuccessful. Both clients are advised to take out an insurance policy costing £500.00 each. Our base costs in acting for each client come to £2,500.00 and we were entitled to charge each client an uplift of 100% on our costs.