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Legal advice does not come cheap – the hourly rate for an average high street solicitor is upwards of £200 (+VAT). Multiply that by the time it takes to resolve a complicated matter, and the end result can be an almighty bill. Fortunately, for personal injury and other litigation cases many solicitors offer conditional fee agreements, better known as ‘no win, no fee’.
At face value these look like a win-win scenario: if you lose, then you do need to pay the solicitor; if you are successful then the solicitor can claim a bonus on his or her fee of up to 100 per cent, which is paid by the other side. The reality, however, is more complicated. Many claims will involve additional expenses – for example medical reports, expert evidence and barristers' fees – which may need to be paid for up-front and, if you lose, you will be liable for all or part of the other side’s legal and other costs.
For these reasons, many litigants take out “after the event” insurance policies to cover their expenses if they lose a case. It was these policies that caused many of the problems that surrounded Claims Direct and other personal injury claims firms a few years ago, when the courts decided that the costs of these policies were too high to be fully paid for by the losing party. As a result, litigants saw their compensation reduced by having to pay part of the cost of these policies.
Since then the system has been fine-tuned to prevent this happening, but there remain a few grey areas with both conditional fee arrangements and after the event insurance policies and you should discuss the potential consequences with your solicitor. Other things to consider are what and how the solicitor is paid if your case is settled before reaching court. Even if you do win your case, the other side may refuse or be unable to pay, so you’ll need to find out who will bear the risk.