Legal question -100% Success Fee normal?
Discussion
A close friend was in a traffic accident a couple of years ago - French lorry driver on wrong side of road took her and then boyfriend out, they were lucky to escape alive but with injuries.
It has taken a long time to bring action for various reasons, but now this friend has a lawyer lined up to act for her and he has laid out his terms for taking on the case.
In essence, he will charge time and disbursements (£200per hour time) and if successful will charge a "success fee" of "100% of our costs plus VAT". There is an insurance policy so in case of losing the lawyers costs are covered.
My question to any legal pros here is whether this is normal charges for this type of case. It seems to me that the guy want to have it both ways - if he loses he gets his fees, if he wins he gets double his fees. In theory this is paid by the other party but surely they will be weighing up the legal fees in determining how much to settle for so my friend will end up getting less. I don't know - never been involved in this sort of thing before but would be very grateful for any advice in case my friend is being lined up for a fleecing....
Don
It has taken a long time to bring action for various reasons, but now this friend has a lawyer lined up to act for her and he has laid out his terms for taking on the case.
In essence, he will charge time and disbursements (£200per hour time) and if successful will charge a "success fee" of "100% of our costs plus VAT". There is an insurance policy so in case of losing the lawyers costs are covered.
My question to any legal pros here is whether this is normal charges for this type of case. It seems to me that the guy want to have it both ways - if he loses he gets his fees, if he wins he gets double his fees. In theory this is paid by the other party but surely they will be weighing up the legal fees in determining how much to settle for so my friend will end up getting less. I don't know - never been involved in this sort of thing before but would be very grateful for any advice in case my friend is being lined up for a fleecing....
Don
dont worry too much - since the accident (and therefore agreement) came in place after 2000 (when regulation came into place) the success fee element is recovered from the defendant. It is standard to claim a success fee in any case on a no win/no fee agreement. The success fee represents a "bonus" for the risk of losing the case and the fact the lawyer has to defer payment until the end.
The success fee is measured on each case and you have to prepare a formal risk assessment on each case to point out the risks and in effect justify the % of the success fee. It is odd for any road traffic case to have a success fee of 100% as they are all very straight forward compared to say a complex industrial disease case where liability is very complex and certainly not easy to judge at the start of the case like a road accident is. I would have thought the lawyer in this case will have to take a vast reduction at the end of the case when he/she negotiates their costs with the defendants.
The more important thing to your friend is the insurance premium she has taken out to cover legal expenses. The cost of a "reasonable" premium is also recoverable from the defendants - but reasonable hasnt yet been very clearly defined. As time has passed since the new regulations have been in place it is getting easier due to various court decisions and its usually ok to recover up to about £400 for premiums in road traffic cases and around £650 in non road traffic. If your mate has paid more than approx £400 for the premium she may find that any cost on top of that is taken from her damages. IE if she paid £1000 for the policy she would lose £600 from her damages. This is how so many of the accident group/claims direct clients got shafted - amongst other ways they ripped them off.
some legal expenses insurers actually offer a premium where if you dont recover all of it they swallow the "lost bit" so you then can be confident of keeping 100% of whatever you settle for/get awarded
hope that helps - feel free to mail me if any other probs.
The success fee is measured on each case and you have to prepare a formal risk assessment on each case to point out the risks and in effect justify the % of the success fee. It is odd for any road traffic case to have a success fee of 100% as they are all very straight forward compared to say a complex industrial disease case where liability is very complex and certainly not easy to judge at the start of the case like a road accident is. I would have thought the lawyer in this case will have to take a vast reduction at the end of the case when he/she negotiates their costs with the defendants.
The more important thing to your friend is the insurance premium she has taken out to cover legal expenses. The cost of a "reasonable" premium is also recoverable from the defendants - but reasonable hasnt yet been very clearly defined. As time has passed since the new regulations have been in place it is getting easier due to various court decisions and its usually ok to recover up to about £400 for premiums in road traffic cases and around £650 in non road traffic. If your mate has paid more than approx £400 for the premium she may find that any cost on top of that is taken from her damages. IE if she paid £1000 for the policy she would lose £600 from her damages. This is how so many of the accident group/claims direct clients got shafted - amongst other ways they ripped them off.
some legal expenses insurers actually offer a premium where if you dont recover all of it they swallow the "lost bit" so you then can be confident of keeping 100% of whatever you settle for/get awarded
hope that helps - feel free to mail me if any other probs.
The explanation in respect of the success fee has been very well explained. If the client is on a Conditional fee agreement (CFA) which is the no win no fee, and they lose the case, the claimant solicitor will get paid nothing. This is why there is a success fee to represent the risk of taking on a case where there is a possibility of getting nothing at all.
The CFA will however pay the defendants legal costs in the event the case is lost.
Most law firms (we do for example) guarantee that there will be no fees or deductions, some law firms will not make such promises, therefore depending on who they use, there is always the possibility that they could end up with quite a big legal bill, and this is always a major risk when using accident management firms.
The CFA will however pay the defendants legal costs in the event the case is lost.
Most law firms (we do for example) guarantee that there will be no fees or deductions, some law firms will not make such promises, therefore depending on who they use, there is always the possibility that they could end up with quite a big legal bill, and this is always a major risk when using accident management firms.
Schnozz - thanks for the very complete explanation. No confusion on your part I think, I probably have misunderstood what happens in the event the case is lost. I had thought that the insurance would pay his fees if he lost, but from what you say I guess he would get nothing.
The cost of the policy is £350.
t-c. I think you have mentioned a possible issue. Quoting from the cover letter:
Under the heading "Disbursements"
"We will pay these disburesements as we go along on your behalf. They will form part of our bill at the end of the case. If we win the case, then we should be able to recover these disbursements from the opponents. If you lose the case, then we should be able to recover these disbursements from your after the event insurance provider."
Under "No Win No Fee"
"I have discussed with you the reasons why the success fee has been set at this percentage rate. The reasons are set out fully in the Conditional Fee Agreement itself. However under the rules which came into force on the 1st April 2000 it should be possible to recover our success fee along with our basic costs from your opponents if the case is successful. However if for any reason we cannot recover our costs or success fee or disbursements from the other then these would have to be deducted from your damages. However in such a case such as this I would normally expect to recover our costs from our opponents.
Is the term "should" in these statement cause for concern?
Thanks again for your advice - it's very much appreciated.
Don
The cost of the policy is £350.
t-c. I think you have mentioned a possible issue. Quoting from the cover letter:
Under the heading "Disbursements"
"We will pay these disburesements as we go along on your behalf. They will form part of our bill at the end of the case. If we win the case, then we should be able to recover these disbursements from the opponents. If you lose the case, then we should be able to recover these disbursements from your after the event insurance provider."
Under "No Win No Fee"
"I have discussed with you the reasons why the success fee has been set at this percentage rate. The reasons are set out fully in the Conditional Fee Agreement itself. However under the rules which came into force on the 1st April 2000 it should be possible to recover our success fee along with our basic costs from your opponents if the case is successful. However if for any reason we cannot recover our costs or success fee or disbursements from the other then these would have to be deducted from your damages. However in such a case such as this I would normally expect to recover our costs from our opponents.
Is the term "should" in these statement cause for concern?
Thanks again for your advice - it's very much appreciated.
Don
Ffirg 005 said:
Is the term "should" in these statement cause for concern?
whilst i think you are right to be over-cautious, that is what you are being. The Conditional Fee Agreement is a pretty standard document - in fact most firms use the actual law society draft and the bits that you have quoted are identical to that draft.
Its not something to worry about - if they lose, they wont go after your friend unless she gave misleading information. If they win, they wont be seeking any payment for costs from your friend if its a standard CFA that she has signed.
i just had a sovinian lorry driver dent up my car
I used a company called helphire.
they were great sold me a insharance for 10 quid
fix my motor at a main dealer
sorted me a deset hire car for the time not a crap 1.1l
strait away and them pursue the 3rd party after they fixed mine
If they dont get it back the 10 quid insharance policy covers it
www.helphire.co.uk/
if it wa the 3rd partys fault then there prity good
give em a try.
>> Edited by Roadrage on Friday 20th February 23:18
I used a company called helphire.
they were great sold me a insharance for 10 quid
fix my motor at a main dealer
sorted me a deset hire car for the time not a crap 1.1l
strait away and them pursue the 3rd party after they fixed mine
If they dont get it back the 10 quid insharance policy covers it
www.helphire.co.uk/
if it wa the 3rd partys fault then there prity good
give em a try.
>> Edited by Roadrage on Friday 20th February 23:18
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