Harold Stock & Co Solicitors explain the new changes to legal costs and fees about to be introduced by the Government.
In April this year the rules on how legal costs and fees operate for most cases will be altered drastically by the Government.
Historically, the rule has been that the loser must pay the winners legal costs. The new rules will change the nature of this arrangement.
Many accident and injury claims have been funded by a No Win No Fee agreement between the client and solicitor. Most of these provided for a bonus or success fee in event of the success of the case. This bonus/success fee was frequently paid by a defendant’s insurance company, on top of the fees normally paid out to the solicitor. Solicitors did not get paid if the case was lost. The financial risk of losing was thus offset against the potential success fee.
The biggest change coming is that these bonus/success fees are to be abolished. Solicitors may still have to carry the risk of cases being lost, but there is a new way for them to be paid for that risk. Instead of the defendant’s insurers paying the claimant’s solicitors a bonus/success fee, that sum will now come from the client out of damages.
To minimise the risk to the client, the Government will cap the bonus/success fee so that it cannot be more than 50% of the damages recovered. In order to limit the impact on the client, the Government has ordered that the level of damages in injury cases be uplifted by 10% across the board.
Cutting out the Middleman.
The next big change is the abolishment of referral fees. It is widely acknowledged that claims management companies (and even insurance companies) advertise heavily on TV, radio, on-line and in the press, and often sell cases on to solicitors. This will no longer be allowed, as there will be a ban on cases being bought or sold. The idea here is that the consumer will go back to his or her local specialist solicitors, rather than be directed to a solicitor by the case having been sold on by a claims company.
Cap on Solicitors Fees
The other major change being introduced by the Government, across all types of case, is a cap on solicitor’s fees according to the amount of money involved in the case. The cap imposed by the Government is relatively low and should benefit the consumer.
Of course, the risk is that these alterations in the law will make it less easy for the consumer, who has, until now, been accustomed to having a claims company help out after an accident. However, the benefit to the consumer will be that he or she will now only deal with their solicitors, and not through a middleman.
Funding legal cases is, and always has been a hot topic, but here at Harold Stock & Co Solicitors, we want all our clients to be fully aware of the new system. If you have been injured in an accident or have any other civil claim you wish to bring, but are worried about financing it, then please get in touch. We look forward to embracing the new system while remaining committed to accessing justice for all our clients.
For an informal discussion about this, or any other legal matter affecting you, contact Darren McGuinness at Harold Stock & Co Solicitors, in the strictest confidence.
Telephone: (Mossley) 01457 835 597 or (Failsworth) 0161 682 2400.