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Personal Injury Claim Funding

Frequently Asked Questions (FAQ)

Q1 - Will I have to contribute towards 1ST CENTRAL Law’s fees?
A - You won't have to pay anything up front whatever happens as client contributions are paid out of damages at the end of a successful claim, and if you lose then you don’t pay us penny. If you win and if you started your "no win no fee" claim after 1st April 2013, you may have to make a contribution to our fees if you don't already have legal expenses insurance to cover them. That contribution will be payable out of your damages, but it will be limited to only a part of them (see below). The good news is that awards for personal injury damages have been increased by 10% for all relevant cases from 1st April 2013 onwards, and this increase will help with any contribution you make. It is still well worthwhile bringing a claim.

Q2 - How much will I have to contribute towards 1ST CENTRAL Law’s fees?
A - If you win your claim there are two types of contribution you may make under a "no win - no fee" funding agreement. Firstly, you might have to pay our “base costs” (i.e. our normal fees), and secondly, you may have to pay a “success fee” (see Q5 below). The success fee is limited by law; the base costs are not limited by the law, but in practice our policy is to limit the combination of the two so that you are almost certain to walk away with 75 percent or more of your damages if you win. You do not have to pay anything up front, and any contribution to our fees will be paid from your damages at the end.

In addition to this, if you have chosen to buy the optional After the Event (ATE) legal expense insurance policy, then you will usually have to pay the premium from your damages at the end of the case. You do not have to take out that insurance if you don’t want to, but your damages may be at risk if you do not have it (see below).

Q3 - Why should I make a contribution to my own legal fees if my claim is successful?
A - Before 1st April 2013 claimants generally received all of their damages after the legal costs had been resolved, but new laws and rules were introduced in late 2012 and early 2013 that changed the funding position dramatically. In essence, success fees and most ATE premiums are no longer recoverable from the losing defendant, and so have to be paid by the successful claimant. These changes were made despite protests and even attempted legal action by Claimant representative groups, who argued that the changes were very unfair. The government pushed on regardless, and the new funding rules apply to all claims that start from 1st April 2013 onwards.

Q4 - How do "No Win - No Fee" or "CFA" (Conditional Fee Agreements) work?
A - In summary, you agree to pay some fees (known as "base costs") to your solicitor, but your solicitor agrees to waive those fees if your claim fails despite your best efforts. To reflect the risk of the solicitor not getting paid, you also agree a "success fee" which is only payable if you win. The success fee is a percentage of the base costs, but it is capped at no more than 25% of the damages (or less, depending on the type of damages you recover).

Q5 - How are the base costs and success fee calculated?
A - Solicitors calculate their fees in various different ways. Here at 1ST CENTRAL Law we work on the basis of an hourly rate for the base costs and a success fee of up to 100%. Both the base costs and success fee are only payable if you win your claim, and in any event the success fee is capped (see above and below). We should make it clear that other solicitors might charge in different ways. Some may not charge a success fee at all, and if they do it may be less than 100% of the base costs. We do charge a 100% success fee, but this is in part because we are an established firm of specialist solicitors who will deliver a high quality and professional service to you, and will make the very best effort possible to get you maximum compensation. Moreover, whilst red tape stops us from giving you a cast-iron guarantee (see below), for all practical purposes we will limit our fees (i.e. the total of our base costs and success fee combined) so as to leave you with 75% of your damages. Some other solicitors firms may not do this.

Q6 - How are my contributions (paid from damages at the end) calculated?
A - By law, the sum you pay towards your success fee cannot (in broad terms) exceed 25% of the value of your damages, excluding any claim for future loss or provisional damages. This means that the success fee is linked to your damages. Our base costs are, in theory, not linked to the damages in this way, but our track record shows that when the base costs and success fees are added together, we have never taken more than 25% of a personal injury client’s damages. Put simply, all of our successful personal injury clients have walked away with no less than 75% of their damages. Red tape prevents us from saying that we would never take any more than 25% of your damages, but we can assure that you the chances of us doing this are so remote that they can be ignored.

Q7 - Will I have anything else to pay if my personal injury claim succeeds?
A - There are circumstances in which Claimants have to pay something towards the other parties’ legal costs, even if damages are awarded. This could happen if the other side makes a formal "Part 36 offer” which you then reject, but which is subsequently shown to have been a good offer. If this were to happen, then you may have to pay the other sides’ costs from a date shortly after the offer. Those costs are generally limited to the value of your damages, so although your damages may be used up you would not end up having to pay anything more. (An exception to this would be if the claim was shown to be dishonest or fraudulent, in which case you could be ordered to pay more.) We have to stress however, that costs orders against our clients are rare, as we give our clients quality advice about when to accept and when to reject offers.

Q8 - Can I protect myself against potentially losing my damages through a Part 36 offer?
A - If you don't happen to already have Legal Expenses Insurance that covers this risk, you can purchase an ATE policy that will protect you as long as you provide honest and reasonable instructions. The cost of this policy is not recoverable from the other side, and as such you would need to pay for it out of your damages. That would be separate from any contribution you make towards our own fees; this may mean that you will be left with slightly less than 75% of your damages if you purchase an ATE premium (but only by a few hundred pounds). You do not have to take out this insurance, but if you don’t then your damages may be at risk from offers as described in the paragraph (Q7) above.

Q9 - Will I have to pay anything else if my claim does not succeed?
A - Not unless your claim was struck out, or shown to be dishonest or fraudulent, in which case you could be ordered to pay all of the other sides legal costs. This very unlikely, and if you have purchased ATE insurance it should also cover that risk.

Q10 - What do I do if I still have a query about the funding of my claim?
A - Please call or e-mail the person dealing with you claim (quoting your claim reference number), and they will discuss your query with you personally.

Technical Information

Legal Aid, Sentencing and Punishment of Offenders Act 2012 - These changes include the following;

  • prohibited referral fees in prescribed circumstances. [sections 56 - 60 LASPO 2012]
  • ended the recoverability of success fees in Conditional Fee Agreements, for most personal injury claimants (excluding mesothelioma claims) [section 44 of LASPO 2012]
  • ended the recoverability of After The Event Insurance premiums for most personal injury claimants (excluding mesothelioma claims) [section 46 of LASPO 2012]

The Civil Procedure (Amendment) Rules 2013 (and the 60th Update - Practice Direction Amendments). These changes include the following;

  • The amount of fees that the Claimant can recover from the other side in low value RTA claims will be reduced from 30th April 2013, and further changes and reductions for other types and values of claims are set to be applied from the end of July 2013. This means that more Claimants face an increased liability for the shortfall in their own recovered costs.
  • Qualified One Way Costs Shifting - means that in personal injury claims, the Claimants doesn't have to pay the other sides costs of the claim is not successful. There are significant exceptions to this which include;
    • where Claimant fails to beat other sides Part 36 offer (contribution can't exceed the damages award plus interest, but the damages will be applied in the first instance to discharge the contribution to the other sides awarded costs)
    • if claim is struck out for being without merit, or for conduct reasons
    • if the claim is determined to be "fundamentally dishonest"
  • If the Claimant beats his own Part 36 offer, then he will receive a 10% uplift an the actual award (with a sliding scale for award exceeding £500k)

Simmons v Castle [2012] EWCA Civ 1039

  • This Court of Appeal decision means that awards for personal injury general damages from 1st April 2013 onwards will increase by 10% where the Claimant instructed his lawyer on a CFA after 1st April 2013, and so has to fund his own success fee from his damages.