Your solicitor’s aim is to maximise the amount of compensation you receive for your injuries and other losses.
The “top line” value of your claim needs to be as high as possible, but that’s not all.
You also want to try to reduce the amount you will lose in having to pay legal fees from your compensation.
For most people who become a personal injury client of Moray Claims / Grigor & Young, you pay nothing to us out of your compensation.
In other words, you receive your damages in full, without any deduction.
In a minority of cases, though, a deduction does apply.
So , how much does a personal injury claim cost? And how can you minimise what you will have to pay out of your damages?
As we will see, it can mean the difference between receiving 100% of your compensation and only 80% – and the reduction has nothing to do with contributory negligence.
Putting it another way, how would you feel if your claim settled at £75,000 and you only received £60,000 when, with a different firm of solicitors handling your claim, you would have received the full £75,000?
A hidden cost in some cases
One of the hidden factors in the economics of personal injury claims relates to how much of your compensation you will actually receive if your claim succeeds.
Few people consider this matter at the outset of a claim.
It’s hardly surprising.
You’ve got so many other things to worry about, including recovering from your injuries and staying afloat financially, if you are not fit to work.
But the nature of the agreement about what fees will be payable is an important consideration when you are deciding which solicitor you want to help you with your claim.
Arithmetic features heavily in this article because it is easier to explain what we mean by worked examples.
The examples below are real cases we have dealt with, though we keep everything anonymous.
The examples illustrate how crucial it is to be clear at the start what sort of feeing agreement you are entering into with your solicitor.
It could make a significant difference to the amount of compensation you receive in your hands at the end of your claim.
“No win – no fee” and legal aid
At Moray Claims / Grigor & Young, we take on personal injury claims in two main ways.
We either deal with them “no win – no fee” or using legal aid.
Legal Aid is still available for personal injury claims in Scotland, though the position may change in future.
Many solicitor firms in Scotland which specialise in personal injury have decided to concentrate on no win – no fee and no longer offer legal aid as an option.
The big risk in personal injury claims is losing the case after a court action has been raised. You can have a large liability for the opponent’s costs.
Insurance required for no win – no fee claims
You need to make sure your no win – no fee claim is covered by some kind of insurance.
An “After the Event” policy, such as we offer at Moray Claims / Grigor & Young, will do the job or insurance via a claims funding company set up by the solicitors themselves.
A common arrangement for no win – no fee is for you to sign an agreement in which you agree that, if you win your claim, the funding company will receive a percentage of your compensation.
Paying an agreed percentage to a claims funding company
Arrangements vary but a typical example would be that you have to pay
- 20% of the first £100,000 of your claim,
- 15% on the next £400,000 (i.e. on the value from £100,000 to £400,000), and
- 10% on anything above £500,000.
So, for example, if your claim settles at £60,000, you have to pay 20% to the funding company – i.e. £12,000 – which means that you receive £48,000.
If your claim settles at £600,000, you lose £90,000 (i.e. £20,000 + £60,000 + £10,000) and receive £510,000
Note that, as a percentage of the total amount of compensation, you lose less for a bigger claim than a smaller claim.
Taking the examples above, the percentage loss on £60,000 is a straightforward 20%. On the £600,000, the percentage reduction is 15% (i.e. [94 / 600] x 100).
Maximising total damages and minimising deductions
Many firms will emphasise how they maximise the value of your claim and often get for clients two or three times the initial offer, by the time the claim settles.
We say that’s fair enough but it’s only half the story.
You must also look at what is being taken away from your compensation to pay the funding company.
Moray Claims / Grigor & Young “nil deduction” scenario 1: legal aid
If we deal with your claim under legal aid, there is no deduction from your compensation if the claim settles successfully.
So, if your claim settles at £40,000 before or after court action is raised, you receive all of that amount.
Under the sort of “no win – no fee” arrangement we have described above, the loss would be 20% – i.e. £8,000
You would receive only £32,000 in your hands.
Moray Claims / Grigor & Young “nil deduction” scenario 2: “no win – no fee” pre-litigation or in the Sheriff Court
If we deal with your claim “no win – no fee” and it settles without the need for a court action or after proceedings have been raised in the Sheriff Court, you will receive your compensation in full.
If your claim settles at £17,000, you get all of that amount. Contrast this with the 20% deal, above. Under that, you lose £3,400. You receive £13,600.
Moray Claims / Grigor & Young cases where a deduction is inevitable: Court of Session actions
As we are a small firm in Moray and do not have an Edinburgh office, we need to get help from Edinburgh solicitors if we decide that a Court of Session action is the best way to maximise your compensation.
At the end of the claim, we need to get paid, as do the Edinburgh solicitors and the advocate (barrister) or advocates who deal with the claim in court.
What follows is a series of case examples. These are actual Court of Session cases we have dealt with and which concluded from 2012 onwards.
We think the figures speak for themselves.
Case Study 1: Road Traffic Accident
This claim involved serious lower limb injuries and permanent loss of function which restricted the range of jobs the client was able to do in future.
The Court of Session case settled in July 2014 for £225,000. The shortfall was £22,600. The client received £202,400.
Under the alternative deal mentioned above, the deduction would have been £38,750, i.e. £16,150 more.
The difference in percentage terms is between losing about 10% of your compensation and about 17%.
Case Study 2: Accident at work
Our client’s claim settled at £275,000 as a result of his Court of Session action in April 2013.
The shortfall was just under £18,000. The client received about £257,000.
Under the alternative type of arrangement described above, the client would have had to pay £46,250 out of his damages. He would have received £228,750.
The differences are between losing about 6.5% of your money and 16.8%.
Case Study 3: Road Traffic Accident
This Court of Session action settled in September 2013 and the agreed damages were £40,000. The shortfall was about £6,350, with the client receiving about £33,650.
Under a “20%” arrangement, the client would have had to pay out £8,000, thereby receiving £32,000.
You can see that, on a “lower” value claim such as this, the differences are minor. In percentage terms, the comparison is between 15.9% and 20%.
Case Study 4: Road Traffic Accident
The Court of Session action resulted in an award of damages of £285,000. The claim concluded in December 2013.
The shortfall was about £23,100, so the client received about £261,900. This is about 8.1% of the total.
Under the alternative arrangement, the deduction would be £47,750 – or 16.75% of the total. The client would have received £237,250.
Summary: deductions matter
When you are deciding who should handle your personal injury claim for you, don’t just look at what they say about maximising the value of the claim.
Also consider what is likely to be taken off your compensation before you receive it.
It is so easy to overlook this and yet it could make many thousands of pounds of difference at the end of the claim.
How we can help
We will be delighted to help you in any way we can.
We do not charge for initial telephone discussions.
As mentioned above, in most personal injury cases we take on, there is never any cost to you at all.