What Is the difference between a Success fee and a Cost Cap in a Personal Injury Claim?
Understanding Your Contribution to Legal Costs
If you’ve been injured and are considering making a personal injury claim, it is completely understandable to want to know how the legal costs will work and how much of your compensation you will keep.
Where a claim is handled under a No Win, No Fee agreement, you will not normally be asked to pay legal fees upfront. If your claim is successful, you may instead be asked to make an agreed contribution towards your legal costs from your compensation.
This contribution is subject to a cap agreed with you at the outset, so you should know before proceeding the maximum contribution that may be deducted from your compensation. This is sometimes mistakenly referred to as a success fee. The success fee is only one part of the overall costs that your solicitor will charge and is in addition to any unrecovered base costs. We believe it is clearer to explain the cap agreed as the client’s capped contribution towards the legal costs of pursuing the claim.
Why Might You Have to Contribute Towards Legal Costs?
The way personal injury claims are funded changed significantly following legal reforms introduced in 2013. In most cases, the legal costs recovered from the opponent do not cover all of the costs involved in bringing a successful claim.
A No Win, No Fee agreement allows a solicitor to take on the risk of pursuing the claim without requiring you to fund the case as it progresses. If the claim succeeds, an agreed contribution towards legal costs may then be deducted from the compensation recovered for you.
The important point: your contribution should be explained clearly before you enter into the agreement, including the cap that applies and how that cap is calculated.
How Much Can Be Deducted From Your Compensation?
The amount a client contributes towards legal costs can vary between solicitors and between different types of claim. That is why it is important to look beyond the phrase “No Win, No Fee” and ask how much you may actually be required to contribute if your claim is successful.
In personal injury cases, there are legal restrictions affecting the amount that can be taken as a success fee from certain types of compensation. You will see this is usually stated to be 25%. However, this is not the same as an overall cap on costs which some firms charge in excess of 35%. Accordingly the precise funding arrangement and the cap on your contribution should always be set out clearly in the agreement you enter into with your solicitor.
At Stonehewer Moss, we believe clients should understand these costs from the beginning. We will explain the proposed contribution, the cap that applies and what it means for the compensation you ultimately receive before you decide whether to proceed.
Why the Cap on Your Contribution Matters
A single percentage point difference can make a significant difference to the amount of compensation you ultimately keep, particularly in a higher-value personal injury claim. Stonehewer Moss offer a cap of 18% for many straightforward cases.
Before signing a No Win, No Fee agreement, it is therefore worth asking exactly what contribution you will be expected to make towards your legal costs if the claim succeeds and, importantly, what the maximum cap on that contribution will be.
If you already have an offer from another solicitor and are unsure about the proposed deduction from your compensation, you can also ask for clarification or seek a second opinion before committing yourself.
Clear Costs Before You Decide
At Stonehewer Moss Solicitors, we want you to understand the financial arrangement before making any decision about your claim. We will explain how the No Win, No Fee agreement works, what contribution towards legal costs may be payable if you succeed and the cap that applies to that contribution.
Asking us about a claim does not commit you to proceeding. If you would like us to review what happened and explain your options, you can contact us for a free, no-obligation claim review.
You can also learn more about the types of cases we handle on our Personal Injury Claims page.
Talk to Us About Your Personal Injury Claim
Find out whether we may be able to help and what your contribution towards legal costs would be before you make any decision.
