The Coalition Government wanted to end the system which provided risk-free claims handling to clients believing that it encouraged “have a go” claims. There was no evidence that it did, in spite of alarmist media articles. Under the new rules for cases begun after the 31st March 2013, the client is expected to contribute to the costs of cases by having deductions taken from the compensation in the event of success.
The following payments might have to be deducted from compensation
► the success fee (and VAT on it ) charged by the solicitor and by any barrister acting under a no win no fee agreement – these success fees are no longer recoverable from the opponent. A cap on the deduction, of 25% of the compensation paid for the injury and past losses, applies.
► a shortfall in the base fees charged by the solicitor – under the old system solicitors often agreed to reduce their bill to the same level as the costs recovered from the other side since the other side paid about 85% of the bill – under the new system the amount the other side will have to pay is fixed by rules and it will only be a moderate contribution in many cases. There is no cap on the deduction here.
► the premium for the insurance taken out to repay expenses if the claim fails and to cover financial penalties operating if a good offer is rejected and not bettered at trial – there is no cap applying here.
To provide a rough and ready recompense for the client, compensation for the injuries themselves is increased by 10%. A few clients might be better off as a result; many will be worse off.