Funding a Personal Injury Claim

No Win - No Fee Agreement (Conditional Fee Agreement)

Most of our clients choose to fund their personal injury claims through a No Win – No Fee Agreement, formally known as a Conditional Fee Agreement (CFA). In fact, over 94% of personal injury claims are funded this way.

Under a CFA, you agree to pay our legal costs only if your claim is successful, meaning you recover compensation from the defendant or their insurers. If your claim is unsuccessful or withdrawn (e.g. due to insufficient evidence), you won’t owe us anything.

Who Pays the Costs?

In English law, the general rule is that “costs follow the event”. This means if you win your case, the defendant or their insurers will usually pay your legal costs.

If costs cannot be agreed upon, they are determined through a court process called Detailed or Provisional Assessment, where a Costs Judge decides the amount payable.

Success Fee

Solicitors may charge a Success Fee of up to 100% of our basic costs. This fee compensates us for the risk of not being paid if the claim fails. However:

• The Success Fee cannot be recovered from the defendant/insurers.
• It is deducted from your compensation.
• It is capped at 25% of your damages, excluding future losses.
• You will retain at least 75% of your total compensation.

Fixed Costs

In many cases, the recoverable legal costs are fixed by court rules, depending on the type of accident (e.g. road traffic or workplace) and the amount of compensation. These fixed costs are paid by the defendant/insurers in addition to your compensation.

There are other types of funding arrangement which we can enter into with you. These funding arrangements include: 

Contingency Fee Agreements

In certain cases, we may offer a Contingency Fee Agreement, also known as a Damages-Based Agreement (DBA). Under this arrangement, if your claim is successful, you agree to pay us 25% of the damages recovered, excluding any compensation awarded for future losses. This fee covers all legal work, including VAT and Counsel’s fees.

Recovery of Costs

We will still seek to recover our basic legal charges and any expenses (known as disbursements) from the defendant or their insurers. Any amount successfully recovered will be credited against the 25% fee you’ve agreed to pay.

However, because the recoverable amount is capped at 25% of your damages, and our actual costs and disbursements often exceed this, we may only offer this type of agreement in specific circumstances where it is appropriate.

Before the Event Insurance

You may already have Before the Event (BTE) Legal Expenses Insurance, either as a standalone policy or included within another insurance policy, such as your home contents insurance. This type of cover may pay for your legal costs in pursuing a personal injury claim.

If you do have such a policy, it’s important that you allow us to contact your insurer to confirm whether they are willing to fund your claim. If they agree, the policy can cover:

• Our legal costs and disbursements in pursuing your claim
• The other side’s legal costs, which you could become liable for if your claim is withdrawn or unsuccessful after court proceedings have begun

Protection Against Costs

Since 1 April 2013, the courts have introduced a rule called Qualified One-Way Costs Shifting (QOCS). This rule generally protects claimants from having to pay the defendant’s legal costs if the claim is unsuccessful.

However, there is an exception:

If the defendant or their insurer makes a formal settlement offer (known as a Part 36 offer) and you choose to reject it but then receive a lower amount at trial than what was offered, you may be ordered to pay some of their costs.

After the Event Insurance

As mentioned in Before the Event Insurance, if you do not beat a Part 36 offer at trial, the Defendant or their Insurers may be entitled to claim legal costs from you. To protect against this risk, you may consider taking out After the Event (ATE) Legal Expenses Insurance, which can cover those potential costs.

However, it's important to note that even if your claim is successful, the premium for this insurance is not recoverable from the Defendant or their Insurers.

That said, due to the rules around Qualified One-Way Costs Shifting (QOCS), the likelihood of you being ordered to pay the Defendant’s costs is now very low. For this reason, most Claimants and their legal teams choose not to take out ATE insurance.

Rest assured, if the Defendant makes a Part 36 offer, we will provide you with full advice on whether it should be accepted or rejected.