No win fee arrangements in personal injury claims generally mean that the winner does not pay the legal fees.
The losing side picks up the tab. However, next month there are changes to the law which mean the winner must contribute 25% of the success fee earned by the winning lawyer. As things stand the winner does not pay any of the success fee. The no win fee* scenario means the defendant, if he loses the case, picks up the bill for the legal fees, the lion’s share of the success fee and costs as allocated. Of course, costs are discretionary, so the allocation of those will depend on the judgement made.
Offer too low?
The vast majority of personal injury claims are settled out of court, which is by far the best way to avoid racking up extra costs on top of the risk of no win fee* liability kicking in. The skill is in pitching the offer just right. Let’s say the claimant is seeking damages for a soft tissue injury and is likely to make a full recovery after a few weeks of rest and physiotherapy. The offer needs to be pitched so the claimant feels compensated and has their extra medical costs covered, but low enough that the defendant doesn’t have to pay over the odds. The calculation will offset the anxiety of going to court, the risk of incurring a no win fee* liability, including the fact that the claimant must stump up 25% of the success fee in any case, against making the offer just enough to be attractive to the claimant, to avoid the hassle, and again cognisant of the liability for the 25%, win or no win fee notwithstanding.
Who pays the bill?
Most of the personal injury awards are paid out by insurance companies and they seek to keep down their costs, because apart from the profit factor, compensation pay-out costs have to pass onto the consumer, in the form of higher insurance premiums, so changes in personal injury compensation legislation is largely driven by these considerations.
Date Published: April 21, 2013
Author: David Brown