How a personal injury solicitor is paid
There should be no mystery about how your personal injury solicitor is paid for the work carried out in your personal injury claim for compensation.
The basic cost is an hourly rate multiplied by the time spent on your case. Most personal injury solicitors will follow the Guideline Rates set by the Advisory Committee on Costs. These are based on the experience of your solicitor and the cost of practising in the various regions of the country, London being more expensive than Exeter, for example.
A solicitor’s bill is made up of a charge for their time, plus VAT, and the expenses they incur on your behalf, known as disbursements. For these purposes we will put all those terms together and call them solicitors costs.
I will also talk about the costs of the other side, or the Defendant. That means the person or organisation against which you are claiming compensation.
Solicitors usually record their time in six minute units on computerised systems. The presumption of the time recording system is that nothing takes less than six minutes.
You will be told that the costs will be paid by the Defendant, the other side to your case, if the case is successful. The confusing part is that you sign up to a deal saying you are liable to pay your solicitors fees, and that is necessary for the solicitor to be paid by the other side. A costs award is based on the other side covering your liability to your solicitor, so if you are not liable to pay, your solicitor cannot be paid. It is called the indemnity principle and must be carefully explained to you.
Even if you are represented on a no win no fee arrangement, properly called a conditional fee agreement, you are liable for your solicitors costs in the event of the case being successful. If you fail you do not pay for the solicitor’s time, but you are liable for disbursements and the costs of the Defendant.
Some personal injury solicitors still follow the practice of insisting on being paid for every minute they spend on a case. The other side must pay on the basis of the work which was necessary, but your liability to your solicitor is based on the work which was reasonable and necessary. Some solicitors insist on you making up the difference between the time they have spent and the time they have been paid for by the other side. That can produce a nasty sting at the end of the case. It is vital to know your personal injury solicitor will not charge in this way, and that you will receive all of the compensation.
So far so good. Your case has been successful, you receive the compensation and your solicitor is paid by the other side.
But what if you do not win, or win outright?
If your personal injury case is unsuccessful you will be responsible for your own solicitor’s fees (unless on conditional fee agreement), own expenses, and fees and expenses of the Defendant’s solicitor.
So how do you avoid the risk of paying if your case does not succeed?
The answer is an insurance policy provided in the form of trade union support, legal expenses insurance, or after the event insurance which supports a conditional fee agreement. All of these forms of insurance are designed to cover your liability to pay costs in a personal injury compensation claim.
Each form of protection will depend on its own terms, but in general the insurer has agreed your case has a reasonable chance of success, and will cover your liability for costs if the personal injury case goes wrong. As with any policy check the amount of cover you have as there is always an indemnity limit.
Please also note you have duties under these policies. You must be honest and cooperate with your solicitor. If your case failed because you were dishonest your insurance would not pay, so be honest.
Can I carry on with my case if the chances of winning are not good?
It is here where we see what is unusual about these various types of legal cover. The insurer must be satisfied at all times that the prospects of success are reasonable. If something changes, such as a witness no longer backs your story, the insurer can back out and refuse to continue to cover you. So you have an insurance policy, but it is a fluid insurance policy as once the chances of success reduce below the required standard the insurer can pull out.
The most common reason for the insurer to review its position is when you are made an offer. You might be offered a 50:50 settlement on liability, which means you and the Defendant are equally to blame for your injury. You may be made a financial offer which the Defendant thinks id reasonable. When that offer is made you can accept it and the defendant will pay your costs. You can refuse the offer and press on, but if the ultimate agreement or award is less than you were offered you will only get your costs to the date of that offer, and beyond that offer you are liable for the costs of both sides. This is the greatest risk in a personal injury case and it is on this point you must be sure you have good insurance protection, as a straightforward case can go bad if a good offer is refused. A good policy and a good personal injury solicitor are your protection in a personal injury case.