“My Solicitor has taken 25% of my personal injury compensation, is this right?”
What is the % success fee that has been deducted?
You signed a Conditional Fee Agreement (“no win no fee agreement”) which included a “success fee”. The success fee is set out in Schedule 1 of the standard Law Society agreement. Your solicitor is allowed to charge this and may deduct it from your compensation.
Your solicitor should recover most if not all their costs from the losing party and you may only be asked to pay the success fee.
Success fees are often set at 25% but can be anything from 0% to 100%.
Where things go wrong!
The % should be applied to the “base” costs NOT the damages. Base costs are described in Schedule 2 of your Law Society standard agreement.
The amount you have to contribute from your compensation depends on your solicitors’ costs.
There is a totally separate rule stating that the maximum contribution (including any VAT) is 25% of the compensation. THESE ARE NOT THE SAME THING!
Most personal injury claims that settle for less than £25,000 have fixed costs (see examples below).
BUT, you may not have agreed fixed costs with your solicitor and instead agreed an hourly rate x time spent.
Even so, BOTH hourly rate and time must be reasonable and can be challenged in court by you. Eg for a straight forward road traffic claim an hourly rate of around £146 is likely to be considered reasonable not £250 and 5 to 10 hours work not 20 to 30 hours.
Most claims worth up to £25,000 where liability is admitted are settled in an online Claims Portal.
25% of fixed costs is often less than 25% of your compensation.
The amount of fixed costs varies depending on how much the claim settled for and at which stage in the claim it settled. The more it settles for the later into the claim it settles the more the fixed costs will be. Fixed costs are set out in the Civil Procedure Rules which govern personal injury claims (see rule 45.18 Tables 6 and 6A; 45.29C Table 6B and 45.29E Table 6C)
Costs for claims which settle in the Portal for £10,000 are usually fixed between £500 and £900 plus VAT.
Costs for claims that settle between £10,000 and £25,000 in the Portal are usually fixed between £800 and £1,600 plus VAT.
There are fixed costs for all claims up to £25,000 even ones that drop out of the Portal or if liability is denied but you go on to win your case at trial, the amounts of those fixed costs vary as I say above but can be worked out relatively easily when you know the stage of the proceedings at which the claim settled and how much it settled for.
Your solicitor should have sent a letter setting out your compensation and any deductions they intend to make and how those deductions have been worked out before you accept.
Road traffic accident whiplash claim, liability admitted, claim settles in the Portal for £2,000.
The fixed costs = £500 plus VAT.
25 % success fee = £125 plus VAT = £150
You should get £1,850.
If the solicitor has taken £500 or even £500 plus VAT as being 25% of the settlement of £2,000 they may have incorrectly taken up to £450 from your compensation.
Accident at work, liability admitted, claim settles in the Portal for £10,000.
Fixed costs = £900 plus VAT
25% success fee = £225 plus VAT
You should get £9,730.
If the solicitor has taken 25% of the damages at £2,500 or £2,500 plus VAT (£3,000) they may have incorrectly taken up to £2,730 from your compensation.
Deduction of Insurance Policy or Premium
“My solicitor has deducted the cost of an insurance policy, is this right?”
Your solicitor should have advised whether an insurance policy was right for you and you must agree to this before it is taken out. If your solicitor did not advise you or you did not agree you should not have to pay for this policy.
Many firms have routinely and wrongly deducted 25% of compensation and an insurance premium, severely reducing what the clients take home in compensation.
You should check your settlement and recover any excessive deductions.
Please contact Nick, a senior solicitor, on 01925 759 510 or complete the contact form on the side of this page for more information. We are here to help you get the right amount of compensation in your claim. I have blogged about this here.