It’s natural to be suspicious if someone seems to be offering
you something valuable in return for nothing.
We are all conditioned to think that if something sounds “too
good to be true”, then it must in fact be too good to be true.
There are times when we’re vulnerable to letting our guard down – for example, if it’s something we really want – and system tools have evolved to provide some protection. For example, many spam filters will catch emails with “free” in the subject line because use of that one word alone indicates dodgy intentions on the part of the sender.
But just because a service is offered as ‘provided free of charge’ to you, it’s not necessarily dodgy as long as the service provider is getting by some other method – such as happens with solicitors working for claimants with personal injury claims.
We invite folk to ask questions via this website.
A fair few of the questions that we receive show that there is still disbelief that we can offer a personal injury claim compensation service which –
- costs you nothing if your claim fails and
- cost you nothing if your claim succeeds.
The latest question of this type that we have received via
the Moray Claims website – and our reply – is set out below.
If my legal expenses insurance (‘LEI’) doesn’t cover me for personal injury in a non-fault accident, how can you help me make a claim without losing any compensation awarded if I win or fees if I lose?
Question submitted via the Moray Claims website
We will break our answer down into 3 parts.
Firstly, we’ll explain the type of insurance the questioner had and why it probably did not cover them for legal advice for a personal injury compensation claim even though the accident was not their fault. Secondly, we will consider the possible options available to a solicitor taking the claim on, despite that insurance not being available. And, finally, we will consider how the solicitor can run the claim in such a way that means you, as the injured person, have a deal that means it costs you nothing whether your claim fails or succeeds.
1. What type of insurance applied here?
When the questioner mentioned legal expenses insurance (LEI)
that did not cover them in the circumstances, the type of LEI they were talking
about was “before the event” (BTE) insurance.
This is insurance that you might have had as an add-on to
your motor insurance policy (if you have suffered a road traffic accident) or
your house contents insurance policy (which may cover you for any type of
personal injury claim). It’s called “before the event” insurance
because, if you have it and it covers you in the circumstances, you took out
before the accident (i.e. “the event”) in question.
The reason this BTE LEI did not cover the questioner for a
personal injury claim will be because each LEI policy is different. Some might
only cover you for legal advice on matters concerning your house or regarding
disputes with contractors or tradesmen. Even if the LEI covers personal injury,
it may not extend to injuries caused by medical negligence or injuries suffered
outwith the UK. All kinds of restrictions can apply.
If you have an accident and think you might have BTE LEI
which could cover the cost of legal advice about making a claim, all you can do
is make an enquiry to the LEI insurers and see whether the policy does in fact
provide cover. You may be able to work this out for yourself by reading your
policy terms and conditions but it’s best just to ask your insurers to confirm
the position – and explain why it does not cover you, if that’s what they say.
Note that you are not obliged to accept the solicitors that
your BTE LEI insurers want to appoint. They will often want you to choose their
own panel firm of solicitors. Your local solicitor can still act for you,
however, especially if they are accredited specialists in personal injury law.
Solicitors appointed by your BTE LEI insurer are unlikely to be local to you or
have the local knowledge that can be so important in making sure your claim
But, just because your BTE LEI does not cover you to make a
personal injury claim, it does not mean you’ve hit a dead end with a possible
claim. Let’s go on and look at alternative claim funding methods.
2. What alternatives do you have through a solicitor to pursue a personal injury claim if BTE LEI does not help you?
We would see 2 other possible options for you.
One of these is legal aid, which is still available for
personal injury claims in Scotland.
If you qualify financially for legal aid, your claim has a
better than 50/50 chance of success and it’s “reasonable” to make legal aid
available (e.g. your claim is not of very low value – say, hundreds of pounds
only), this is an alternative option to BTE LEI.
In fact, the Scottish Legal Aid Board will refuse legal aid
to you if they believe you have BTE LEI available to you.
The other – ‘second’ – option is that your solicitor acts for you on a “no-win-no fee” basis.
No win-no fee requires another type of legal expenses insurance which is known as “after the event” (ATE) insurance.
As the name implies, this is insurance that you don’t have
in place at the time of the “event” (i.e. the accident) but you take
out afterwards – “after the event”.
The ATE insurers are willing to provide cover because they
are satisfied (on the basis of the solicitor’s analysis of the claim’s prospects)
that there is a better than 50-50 chance that you will succeed with the claim.
There is a premium to pay for that insurance but, for example,
with the type of ATE insurance we use at this firm, if the case subsequently
fails, the insurance premium is itself “insured” (in other words, the
insurance premium is not payable by anyone if the claim fails).
In the event that the claim succeeds, the insurance premium is
payable to the insurer when the claim concludes. For a road traffic accident,
the cost of the insurance is about £200; for any other type of accident, it is
about £500. At this firm, as we tend to be dealing with people who are local to
Moray, we agree that, in the event that the claim is successful and the
insurance premium is payable, we will absorb that cost (so the client does not
have to pay it).
In general, if your solicitor is acting for you no-win-no fee, in the event that the claim is unsuccessful, you will not be charged anything for the work that has been done (as the term “no win-no fee” implies). This seems to be well understood, generally.
On the other hand, in the event that the claim is successful, the general understanding seems to be that the solicitor will take a percentage of your compensation (typically, up to 25% of your compensation) to pay “legal or other fees”.
How can your solicitor work ‘for nothing’ under legal aid or ATE insurance?
Under legal aid..
…you are guaranteed to receive 100% of any compensation that is agreed to be paid to you or awarded by the court. This is because the legal aid regulations prevent your solicitor charging to you anything beyond what they can recover as a fee from the insurers.
Under ATE insurance…
Note that any “success fee” charged to you is effectively ‘extra’ payment for the solicitor.
In other words – and the main point to take from this – if your solicitor does take an extra “success” fee in that way, they are getting that in addition to a fee that they will recover from the third party insurers (i.e. the insurers of the other party, against whom you are claiming).
The ‘extra’ fee may be justified if your case is particularly complex or risky. Some types of personal injury claim are inherently more risky and this makes a success fee more liekly to be justifiable.
In the event that your claim concludes successfully before it goes to court, in Scotland, the solicitor is paid a scale fee, usually under what is known as the Compulsory Pre-action Protocol, which is on a percentage basis. Accordingly, the more compensation you receive, the greater the fee that is payable to the solicitor by the third party insurers. But that fee is not taken out of your compensation; it is paid separately and in addition to your compensation.
In the event that your claim settles or is decided after court action is raised, legal expenses are claimable from the third party or their insurers on a different basis. In this situation, the expenses are calculated according to a scale set up by the court in question (these are known as “judicial expenses”). The expenses are calculated and payable as additional to what is paid to you as compensation, so there is money available out of which your solicitor can be paid rather than having to charge anything directly to you. Again, if your solicitor is charging you a success fee percentage deducted from your compensation, that will be in addition to what they are able to recover by way of judicial expenses.
We discussed that “before the event” LEI insurance may or may not cover you for a personal injury compensation claim.
If it does not, that is not the end of your options.
In Scotland, you may be able to pursue a claim either with the benefit of civil legal aid or using another form of LEI insurance known as “after the event” insurance.
Under these funding methods, it is not a foregone conclusion that you will lose some of your compensation to pay fees (or similar) if your claim succeeds. There are solicitors out there who will run your personal injury claim on the basis that, not only will it cost you nothing if your claim fails, it will also cost you nothing if your claim succeeds. In other words, you will receive all of your compensation without any deductions.
How we can help
In some ways, an offer from a solicitor that you will not have to pay them anything for their work whether your claim fails or whether it succeeds sounds “too good to be true”. However, as we have discussed in this article, it is a perfectly logical, reasonable and possible scenario.
Logistically, it works best where the solicitor you deal with is local and a specialist in personal injury work.
(At Grigor & Young / Moray Claims, the types of cases where that arrangement does not apply is either with medical negligence cases or with cases which have to be litigated in the highest civil court in Scotland, the Court of Session, rather than in the local Sheriff Court – and, having said that, many personal injury cases do not have to go anywhere near court at all).
If you have any questions arising from this article, please do not hesitate to contact us.
Remember that we aim to help people in Moray to claim fair and full compensation for personal injury in such a way that it costs you nothing, whether your claim succeeds or not. We are specialist, accredited solicitors – at Grigor & Young LLP, Elgin.
Links you might like
The following articles on this website and on the Grigor & Young website deal with the issues of funding of personal injury claims and the “hidden cost” associated with some claims: