Has my solicitor deducted too much from my compensation?
“My solicitor has taken 25% of my compensation/damages for my injury!” If this has happened to you and you are not sure if it is right or fair please get in touch with us.
A 25% deduction is unlikely to be correct or allowed under your “no win no fee agreement”.
In personal injury claims, for all no win no fee agreements signed after 1st April 2013 the solicitor cannot take more than 25% of the compensation (or damages) BUT that does not mean he is entitled to take up to 25%.
The charge is often called a “success fee” and these are the rules which apply:
- Success fees have to be detailed in your no win no fee agreement with your solicitor.
- They cannot be more than 100%, and here’s the thing…
- The % is to be applied to the COSTS incurred, NOT THE COMPENSATION!
- The total success fee cannot be more than 25% of your compensation (for injuries and past losses).
Because of (3) above, the actual amount cannot be calculated until the costs are known. Some solicitors may be misunderstanding these rules and applying 25% of compensation/damages as a standard approach.
This is WRONG, the 25% of compensation/damages is a CAP not the starting point. It cannot be exceeded but it is not the way the success fee is to be worked out. The 25% cap includes VAT.
How costs are calculated
Costs in most injury claims are fixed. Sometimes, you might have agreed to pay your solicitor based on the time spent on your case. Your no win no fee agreement should say how your solicitor’s costs are to be calculated. You may even have received a bill from your solicitor.
The success fee % must then be applied to those base costs (base costs just mean costs before the extra expenses such as medical report fees and court fees).
A 25% success fee is unlikely to be as much as 25% of the compensation.
How much can the % success fee be?
The % success fee can be anything up to 100% of the base costs. Base costs mean costs not the extra expenses and disbursements such as medical expert fees, medical records fees or court fees.
Lets say you have a personal injury claim which settled for £10,000 and the costs which your solicitor is entitled to recover from the losing party is £2,500 plus VAT (a total of £3,000).
(1) If your no win no fee agreement contains a success fee of 25% of base costs.
The correct success fee by law would be 25% of the base costs of £2500 plus VAT ie 25% of £3,000. This would be £750. You should therefore receive £9,250 of your compensation.
What might have happened is your solicitor has deducted 25% of the compensation ie £2,500 and sent you £7,500.
This would be WRONG and you would have been overcharged and entitled to recover the difference between the £7,500 and £9,250 (ie £1,750) from your previous solicitor.
(2) Compare this to a no win no fee agreement that has a success fee of 100%, the success fee would be £3,000 as this is the same as the costs.
BUT this amount exceeds the CAP of 25% of the compensation (25% of £10,000 which would be £2,500). The solicitor is only entitled to deduct £2,500 even though his calculation comes out higher and you would have paid £500 too much and be entitled to reimbursement of this amount.
I agree it is sometimes hard to get your head around the figures and so please get in touch with us as we can help you recover what was rightfully yours.
If you think you have had too much deducted from your damages or compensation or are not sure that the success fee has been calculated correctly please please get tin touch with us and we will do our best to recover what you should have had. Nick is a senior solicitor and can be contacted on the telephone number 01925 759 510 or by using the contact form on the side panel of this page.
Please don’t be short changed of the rightful amount of compensation by wrongful deductions by your solicitor.