Although anyone who has ever watched a television court drama from the USA will know how prevalent compensation claims have been in the United States for many years, in the UK it was a fairly rare occurrence until the government introduced ‘Conditional agreements’ in personal injury cases in 1995.
Before then anyone seeking compensation from another individual, company or official body for a claim based on ill health or injury faced the possibility of ending up with substantial punitive charges if unsuccessful.
Conditional agreements, more commonly referred to as ‘no win no fee’ arrangements, are a form of contract between a client and their legal representatives. It essentially means the solicitor instructed by the client only gets paid their “fee” if they win the case. Together with appropriate insurance, it also allows for a negative outcome to result in no cost to the claimant, making the arrangement very fair and means the client shouldn’t have to put their hand in their pocket to pursue the claim at any time.
The idea behind the introduction of the practices was to enable wider access to the courts for people who may previously have been deterred from pursuing an injury claim due to the fear of ending up in debt for legal expenses outlay.
A subsequent change to the law in 1999 saw the burden of funding moved from the claimant to the defendant, so the losing party would be liable to pay the claimant’s costs as well as the compensation amount.
Some insurance companies have been unhappy about the arrangements because they suggest that unscrupulous, specialist claim firms take on cases with little chance of success.
This could be thought of as a somewhat cynical view as someone who has suffered an injury or illness brought on by the actions or lack of actions of another party should not be unable to lodge a claim for fear of negative financial repercussions.
However, the government introduced changes to the law regarding no win no fee cases in April of this year. There are now two types of no win no fee cases: conditional fee agreements (CFAs) and damages-based agreements (DBAs), sometimes called contingency fees.
For both types of cases, the lawyer’s payment is still conditional on the case being successful and if the case is lost the lawyer is not paid. If the case is won the way the legal costs are paid has changed, with a CFA including the normal fee plus an uplift or success fee and a DBA being based on a percentage of the damages recovered.
The previous arrangements meant that the winning party’s ‘success fee’ was paid by the losing party in addition to the ordinary legal costs of the winning party. The new changes mean that any ‘success fee’ is now paid by the winning party, usually out of damages recovered.
DBAs could not be used in civil litigation before 1 April 2013 and were more commonly used for cases in employment tribunals. Now, however, they can be applied to civil compensation claims and basically mean that a lawyer can take an agreed percentage of the damages recovered for their client as their fee if the case is successful.
A more worrying development is the recent increase in insurance companies giving “pre-medical” offers of settlement.
These early offers are becoming increasingly common because they avoid numerous costs for insurers such as legal and medical outlays. The Law Society are so concerned about the practice that they launched a campaign to persuade personal injury victims to use a solicitor rather than rely on these kind of ‘quick fix’ settlements.
Accepting a pre-med offer means that, although any payment may be received quickly, it is likely to represent a far lower figure than might be achieved by using a solicitor. Without a medical report it is impossible to ascertain any long-term effects and this could impact on the assessment of the claim amount. Once a settlement has been agreed, there is no chance for an injured victim to go back at a later date if symptoms deteriorate or other injuries become apparent.
The Law Society accept that using legal representation can increase compensation threefold and that any agreement reached ensures that that the compensation fully reflects all the different aspects involved in calculating a settlement figure.
Choosing the right solicitor to represent you in a claim is important, as this area of law is complex and demands specialisation in order to get the best results.
It is always worth remembering that insurers are usually going to be looking to make the best deal they can, and therefore an early pre-med offer could be seen as an opening round in a developing negotiation. Client-oriented solicitors are always going to be working with the claimant’s best interests in mind and as such are the best way of trying to go about securing the correct level of compensation that you are entitled to and deserve.