Welcome to the New Age

Well, Judgment Day has arrived and passed comparatively quietly when compared with the build-up over the last year.  So what exactly has changed since April 1st and how does it affect you?

For one thing referral fees have been banned, so that Solicitors can no longer pay another company for an injured person’s details.  Generally we are all for that; it always was an unseemly practice and where cold hard cash is involved the incentive will always be there to work on the darker side of the rules.  Cue newspaper reports of employees selling customer data for personal reward.  The drawback?  Insurers make millions from selling their own client’s details to law firms on their panel; indeed, Admiral alone made £18.6m last year by doing just that.  The April changes are, according to the Government, aimed at reducing excessive costs in the personal injury industry, thereby driving down the cost of motor insurance.  If Admiral has to plug that gap before it can even think of reducing premiums, what are the chances of them ever doing so?  None, in case you were confused.  Particularly as LV insurance has recently announced that customers should not expect any more than a 3% decrease in their premiums following the changes, despite the fact that the reason the insurance industry lobbied the Government for the changes in the first place was precisely so that premiums could be reduced. You couldn’t make it up.

So, what else?  Ever heard of “No Win No Fee” agreements?  You know, where your Solicitor can represent you for free because why should you have to pay for legal representation when you have just been injured in an accident that was not your fault, you are off work and unpaid, and you do not have £5,000 lying around to pay for a lawyer?  They still exist, but from April you will have to pay part of any compensation that you receive to your Solicitor as payment of part of their costs.  The “success fee” is a percentage enhancement on costs that lawyers have been able to charge to the fault-party in consideration for having to wait for payment of their costs until the end of the case.  Most success fees have been fixed dependent upon the type of case.  Now that success fee has to be paid by the client.

No Win No Fee Agreements, more properly called Conditional Fee Agreements, have always been backed by an insurance policy.  The reason?  The rule in litigation has always been that the loser pays the winner’s legal costs.  Which means that if you brought a personal injury case and lost, you paid your opponent’s legal costs (which could be astronomical).  If your case was funded by a CFA you did not have to pay your own Solicitor’s costs if you lost, but that did not protect you against your opponent’s costs.  The insurance policy paid your opponent’s costs if you lost, so that you can proceed to a trial confident that, win or lose, you would not incur any financial risk.  If you won, your opponent paid your insurance premium along with your legal costs.  Not so from April, where now you will have to pay for your own insurance policy out of your damages.  Gone are the days of free legal representation I am afraid!

To balance that risk Qualified One Way Costs Shifiting has been introduced for personal injury cases.  The rule has changed, and now you do not pay your opponent’s legal costs if you lose, providing you act reasonably and the claim is legitimate.  You are therefore protected from financial risk and an insurance policy does not appear to be necessary, on the face of it.  However, there is still a risk that you could be liable for your opponent’s costs; if you fail to beat a previous offer of compensation at trial, or if you are subject to an interim application for instance.  Insurance policies are still likely to be necessary, but you will have to pay for them yourself.

Damages Based Agreements have been introduced.  They work a bit like the American Contingency Fees, where the Solicitor gets an agreed percentage cut of whatever compensation you are awarded, but they are capped at 25% of damages for personal injury work.  The truth is that they are so poorly thought out that their introduction was met with barely-disguised sniggering within the profession, and they have been almost universally disregarded.

The net result is that if you are injured in an accident you will have to use some of the compensation that you deserve and, indeed, are entitled to, to pay your lawyer’s fees.  To help Claimants out the Government has increased the amount of compensation payable by 10% from April, so that a £1,000 claim is now worth £1,100.  That is of little comfort if the amount you owe your Solicitor is £250.  Bad times for Claimants who have been injured in accidents through no fault of their own.

 If you have been involved in an accident call David Mayor or any of our Personal Injury Solicitors for a free consultation on freephone 0800 975 2463, or contact us by email for free expert legal advice.

David Mayor

About David Mayor

David is Head of the Preston Office's Civil Litigation team and deals with all types of private Civil Court disputes. David’s blogs cover his expertise in all aspects of personal injury law from low value Road Traffic Accidents right through to complex large loss claims. David also writes and has a vast array of experience in Public Liability (trips and slips), Employer's Liability (accidents at work), and Motor Claims (motor vehicle accidents, pedestrian accidents).
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