“My solicitor has taken 25% of my compensation is this right?”
A 25% deduction from your compensation may be unfair or wrong even if you agreed to a 25% success fee in 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%.
What are the Rules about “success fees”
- 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).
The amount of a success fee cannot be worked out until the costs are known.
Many solicitors misunderstand or ignore these rules and simply deduct 25% of your compensation which may be an unfair or wrong deduction.
This is WRONG. 25% is the most that can be deducted from your compensation not what you should have deducted.
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.
Compensation = £10,000
Your solicitor’s costs = £2,500 plus VAT (a total of £3,000).
(1) No win no fee agreement success fee = 25% of base costs.
Correct success fee 25% of costs of £3,000 = £750.
You receive £9,250.
Wrong success fee 25% of the compensation of £10,000 = £2,500
You received £7,500.
You are entitled £1,750 from your previous solicitor.
(2) Fixed fee case
Correct success fee 25% of £600 = £150
Wrong success fee 25% of £10,000 = £2,500
Overcharge of £2,350.
I agree it is sometimes hard to get your head around the figures, see our webpage for more information.
Get in touch with us to check if you have had too much deducted from your compensation.
Nick is a senior solicitor and can be contacted on the telephone number 01925 759 510 or by using the contact form or the Contact Us form on the side panel of this page.
Please don’t be short changed of the rightful amount of compensation by wrong deductions by your solicitor.