How do solicitors get paid when you pursue a personal injury claim?

The general rule in personal injury claims in relation to payment of costs is that the ‘losing’ party pays the ‘winning’ party’s costs.

For this reason, a lot of people who bring personal injury claims decide to fund their claim by way of a Conditional Fee Agreement (more commonly known as a ‘No Win, No Fee’ Agreement) supported by a policy of After-the-Event Insurance. This a policy of insurance taken out on client’s behalf which protects them from having to pay out for the other party’s costs if such an order is made.

If you bring a personal injury claim and are awarded compensation then you can expect some of your solicitor’s costs to be paid by the other party.

There are two different ways of assessing the amount of costs which are to be paid. There is a regime of fixed costs and standard costs. The regime which is used to assess the costs in a case depends on the amount of compensation you are awarded.

If your claim settles for between £1,000 and £25,000 then the fixed costs regime will apply. This regime was brought in by the government in 2013.

The Civil Procedure Rules which govern personal injury claims set out the amount of costs which a party will receive. The amount will be determined by several factors such as:

• the type of claim (for example a road traffic accident, an Employer’s Liability claim or a Public Liability claim)
• whether the claim has stayed within the Claims Portal process
• the amount of compensation awarded
• the stage at which the claim has settled (for example before or after the issue of Court proceedings)

In addition to these costs, the other party will also have to pay the expenses incurred in bringing the claim such as the medical expert’s fees or Court fees.

If your claim settles for over £25,000, then standard costs will apply. Your solicitors will prepare a Bill of Costs which will be formally served on the other party and the parties will then negotiate until an agreement can be reached (much like they did during the claim itself). If an agreement cannot be reached, then it will be down to a Costs Judge at Court to decide how much the other party should pay in costs.

In the vast majority of cases the amount a solicitor receives in costs from the other party does not cover the amount of work they have done in order to bring the claim to a successful conclusion.

It is for that reason that solicitors firms now need to make a deduction from client’s compensation in order to cover some of this shortfall as well as to cover the cost of the After-the-Event insurance premium and the success fee which cannot be recovered from the other party.

If your case is unsuccessful, then your solicitors will not charge you for the work that has been carried out of your behalf and the After-the-Event insurance policy will cover any costs or expenses that need to be paid (subject to the terms and conditions of the policy).

In addition to Conditional Fee Agreements, there is also the option to pay a solicitor privately to act on your behalf however, this is generally not advisable as a Conditional Fee Agreement generally offers you greater protection in the event of an unsuccessful outcome by virtue of the after-the-event insurance policy which a solicitor will take out of your behalf. If you have been paying privately and do not have the after-the-event insurance cover in place for an unsuccessful claim, then you could be ordered to pay the other party’s costs and your own expenses which could be substantial.

Lastly, some car or home insurance policies or credit cards do offer legal expenses insurance which could potentially be used to fund a personal injury claim. If you choose to use your legal expenses insurance then you will be referred to a firm of solicitors through your insurers who will deal with the claim on your behalf. Again, this would be subject to the terms and conditions of your insurance policy.