CASES STARTED ON OR AFTER 1ST APRIL 2013
The new system of funding is as follows for no win no fee agreements signed after the 31st March 2013.
► If the case succeeds, we charge:-
♦ a base fee assessed by reference to the hourly rate applying for the hours worked. There are different hourly rates for different complexities of case. The opponent may only make a moderately sized contribution to legal fees and the client may well have to contribute to the shortfall from the compensation. In many cases worth up to £25,000 the opponent has the benefit of fixed costs rules which limit to amount the losing opponent pays towards the winner’s costs to fixed and often quite modest amounts.
♦ a success fee, which is paid by the client from the compensation subject to a success fee cap of 25% of the compensation paid for the injury and past losses (*)
♦ the compensation is increased by 10% to offset the deductions operating
♦ our expenses are charged to the client and generally recovered from the opponent
♦ any barrister’s base fees are charged to the client and may be recovered from the opponent
♦ any barrister’s success fees are charged to the client but cannot be recovered from the opponent so the 25% success fee cap applies
♦ an insurance policy is taken out at the outset, to repay the expenses if the claim fails and the costs penalties which operate if a certain type of offer is made, rejected and not beaten at trial. The cost of the insurance falls on the client if the claim succeeds and is paid from the compensation.
* there are temporary exceptions for mesothelioma defamation and insolvency cases.
► If the case fails:-
♦ we charge nothing
♦ any barrister involved in the case is likely to charge nothing
♦ the client recovers nothing
♦ the client who has acted reasonably does not have to pay the other sides’ fees and expenses
♦ a claim is made on the linked insurance to repay the expenses the claim has generated
♦ the insurance premium is written of by the insurer.
CASES STARTED BEFORE 31ST MARCH 2013 (OLD SCHEME)
This is a summary of the no win no fee scheme as it applied to clients with a no win no fee agreement signed before the 1st April 2013.
This scheme was available for reasonably strong cases, namely those cases that have prospects of success of at least 55% or more. We first had to assess the prospects of success for which information and evidence were required. Once a conditional fee agreement was signed, the scheme was such that we would be paid if we won and we would be paid nothing if we lost.
If we won we received, in addition to our basic costs often calculated at hourly rates, a success fee which is a percentage increase on the basic costs. The success fee was assessed on the chances of success and the risks in a case or was fixed by rules of court. The success fee was normally reimbursed by the opponent who, more likely than not, was ordered to pay the amount of the success fee, either in full or only in part and if a client only recovered part we often agreed to reduce our success fee to the fee the client actually agreed to be paid by the opponent or awarded by the court. If we lost, there was no success fee and no basic costs to pay under such an agreement.
If the claim failed you would have to pay your opponent’s legal fees and expenses and therefore you needed to insure yourself against this risk. This was known as two-way costs shifting.
An insurance policy was attached to the no win no fee agreement for this purpose which met the other side’s fees and repaid the client’s own expenses if the claim failed. The premium was deferred to case – end and only paid if the claim succeeded and the premium was then recoverable from the opponent
This type of funding was normally appropriate where an opponent might be ordered to pay your legal fees and could either afford to do so or had insurance to enable them to do so.
These cases were cases such as personal injury claims, general litigation claims and claims against the Motor Insurers Bureau in respect of an uninsured, identified driver. It was seldom appropriate for Motor Insurers Bureau (Untraced Driver) claims, employment claims and claims against the Criminal Injuries Compensation Authority.
Some medical negligence cases with excellent success prospects could be funded under No Win No Fee Arrangements and backed by an insurer.
However on the 1st April 2013 that system was swept away.