Could someone comment on this letter from a no win no fee company please.

turnitround

My neighbour has instructed a no-win, no-fee solicitor to deal with a claim for an accident at work. Judging from everything he has said re medical reports etc it is not going well. The company have admitted liability but his injury is relatively minor and from the medical reports it appears that a lot of the problems are age/degenerative related so probably not a massive payout anyway. The solicitors have taken over 2 years to date. I'm worried that he is going to end up owing the solicitor a lot, or does the cap mean that cant happen? I'm also concerned about the disbursements. Are they payable on top of the cap? He doesn't seem to understand the letter and has asked me to look at it but I'm unsure as to if I am reading it correctly and dont want to alarm him unnecessarily.

I'm worried he is going to be hit with a huge bill from them, can anyone look at this extract from correspondence he got today.

I appreciate that it is quite a lot to wade through but does anyone with a better brain than me think this example below from a letter he received is not a good
sign., I have highlighted the parts which concern me most.


The current hourly charge rate for the person with day-to-day conduct of your claim, +++++++++++ is £360.00

per hour.

The arrangement we have reached for payment of these costs remains as set out in previous correspondence.

We may seek from your opponent a sum less than you are liable to pay us if in our opinion it will assist the

process of recovering the costs your opponent is likely to be ordered to pay. This means these rates, or the time

we will charge you, might be detailed as lower in the request to your opponent and by continuing to instruct us

you consent to that. We believe these rates are justified to reflect the firm’s skill and specialised knowledge in

the handling of your claim.  However, we are required to provide a warning that the firm’s hourly rates might

not be recovered from your opponent, or even sought in the full sum from the outset, and by continuing to

instruct us you approve the rates which the firm are charging.

You have considered the table below showing how much more the hourly rates of this firm are compared with

those of Guide to the Summary Assessment of Costs upon which the Court will in all most all cases award

hourly rates to be recovered from your opponent. Below is the said guide.

You have been advised that our firms is likely to be found by the Court to be situated in area “National 2” and

our hourly rates are;

• At least £105 and as much as £234 more for Partners, Associate Partners and those of similar

experience.

• At least £117 and as much as £209 more for Associate Solicitors, Associate Advocates, Chartered

Legal Executives and those of similar experience.

• At least £77 and as much £169 more for Solicitors, Consultant Solicitors, Senior Litigation Executives

and those of similar experience.

• At least £104 more for Trainee Solicitors, Litigation Executives, Litigation Assistants and those of

similar experience.

You understand that our hourly rates are unusual. You understand we are thus required to tell You that as a

result the hourly rates may not (and indeed almost certainly will not) be recovered from the other party in full.

You understand the consequence is that if the court were asked to assess our charges, without your consent these

rates would be substantially reduced. You consider you have had a full and fair explanation of the factors

relevant to you, so that it would be fair to hold you to these terms.

You understand that the above will cause a substantial deduction from damages. You understand that other firms

may charge lower hourly rates. You understand the Success Fee is formulated on the basis of these rates and the

Base Charges as a whole, despite what is said and warned above. You also understand that some firms may

charge no success fee or any other deductions from damages whatsoever.

We acknowledge that the requirements for your informed consent have been met in all the circumstances, and

pursuant to the authorities of McDougall v. Boote Edgar Esterkin (a Firm) [2001] 1 Costs L.R. 118, Belsner v.

Cam Legal Services Ltd [2020] EWHC 2755 (QB), BCX v. DTA [2021] EWHC B27 (costs) and EVX v. Julie

Smith [2022] EWHC 1607 (SCCO).

You understand that in the case of claims for those under 18 years of age, or without capacity to conduct their

own claim, the court will be required to approve any payment from damages for such above deductions, which

will include scrutinising whether you incurred such deductible amounts reasonably, and that they were

reasonable in amount. You understand that you must determine whether these rates are reasonable. You

understand in the event the Court does not approve deductions from damages to pay for these charges, he will

nevertheless remain liable to us.

Routine letters that we write and telephone calls that we make and receive are still charged at one tenth of an

hour. Other letters and calls remain charged on a time basis.

In addition to the above detailed charges, we charge £25 plus any applicable VAT for each payment made by

the Solicitors to the Client.

In this case the overall costs which have been incurred to date amount to a total of 267 units. This figure has

been calculated by our computerised case management system which charges in time units of 6 minutes. The

correct hourly rate for the person conducting the case needs to be applied to the units figure. The person

responsible for your case is +++++++ Partner under the supervision of+++++++, a

Partner. Additionally, any success fee agreed, VAT (currently 20.00%) and all disbursements need to be added.

Bank Account details

In order to make any payments to you, we require you to have a bank account in your name, either as sole or

joint account holder. Until you provide bank details the ability to distribute any funds due to you will be

impacted. Please contact the person responsible for your claim to securely provide account details. We request

that you do not email this information for your protection.

Your funding agreements

You will recall instructing us pursuant to Conditional Fee Agreement, whereby we agree to waive our

professional charges should the claim lose, and seek no more from you than the deduction cap specified in your

Conditional Fee Agreement if you win. In addition to professional fees there are disbursement charges. These

are things like; court fees, records fees, expert fees and otherwise. These are payable whether, or not you win or

lose. Furthermore, if you win but achieve no more than had previously been offered to you by your opponent,

then you could be liable for up to a maximum of the full value you are compensated, to pay your opponent in

legal costs.

To protect you from these risks we arranged insurance. That provides that in the event that your claim loses, or

you fail to beat an offer from the other party, they will pay your disbursement charges and/or the other party’s

legal costs, as appropriate. They covered to the beginning of your claim to ensure that you had absolute

protection. In exchange for this protection you are liable to pay the policy premium from your compensation.

By way of example is a calculation of an example settlement;

Damages = £5,000.

Solicitors ‘cap’ = £1,250 + VAT (£250) = £1,500

ATE Premium = £375 + Insurance Premium Tax (£45) = £420

Money transfer fee = £25 + VAT (£5) = £30

Balance = £3,050.

Please note that the above is an example for illustrative purposes and the actual charges applicable to your

case may differ including whether VAT is inclusive or to be added to deductions.

As an alternative to the funding agreement we offered you, if you are pursuing a claim to the Motor Insurers’

Bureau under the Untraced Drivers Agreement or Criminal Injuries Compensation Authority and you have

Before The Event Legal Expenses insurance it may be that you have cover for legal fees which you could

utilise, or you could pursue these cases yourself without a representative

Thank you to anyone who has waded through.

Gavin83

I'm not a solicitor by any means but this is my take on it. To date the solicitor fees are around £9,612. However they'll attempt to recover this from the losing party but the amount they can claim in this regard is capped at £234 per hour. Therefore assuming they can recover this from the other party your neighbour will owe them £3,364. If they can't recover this from the other party for whatever reason your neighbour could be liable for the lot.

I don't know what the award is likely to be but if it's less than the £3,364 then he could end up out of pocket.

You should always be extremely careful before pursuing legal action. Even if you win it's potentially possible to be out of pocket and if you lose you could be out of pocket by a life changing sum.

Also that hourly rate is extortionate. He should never have agreed to that contract. They even acknowledge in the contract that it's high!

Malthusian

What is the "deduction cap" specified in the Conditional Fee Agreement he was issued, and is referred to in the letter? In £ and p?

turnitround

Thank you for the replies. I dont know what the cap is in his agreement. He did show me but I can't remember but will ask him when I next see him. 
I agree he should never have gone down this route and would have advised him against it had I known earlier. Unfortunately, he seems to be one of those who believes everything he sees. He has recently spent over £200 on some vitamins gums from America which are probably a huge con as well.
Of course, if he ends up owing them he will say he has been conned rather than gullible.

MEM62

No win no fee firm are the bottom feeders of the legal world.  I cannot for the life of me understand why people get into bed with these guys.  In this case the claim was probably going nowhere anyway.  However, in cases where people need proper legal representation, they need to engage a real lawyer     

pinkshoes

turnitround said:

Thank you for the replies. I dont know what the cap is in his agreement. He did show me but I can't remember but will ask him when I next see him. 
I agree he should never have gone down this route and would have advised him against it had I known earlier. Unfortunately, he seems to be one of those who believes everything he sees. He has recently spent over £200 on some vitamins gums from America which are probably a huge con as well.
Of course, if he ends up owing them he will say he has been conned rather than gullible.

Oh dear, this might not end well for him.

It sounds rather like negligence on behalf of the no win no fee company to having taken this case on, as they must have know that their own fee would be much higher than the payment received, and thus the OP could end up with nothing. 

As the company have already admitted liability then the "win" bit is already there, it's just the "how much" bit that is now going to be an issue if it was never a huge claim in the first place. 

It's a little like blackmail, as they said:

 by continuing to instruct us you approve the rates which the firm are charging.

So if he drops the case he has to pay, and if he continues he could end up paying all their fees.

RobM99

"No win, no fee" companies are only going to take cases they know they can win, surely? The simpler the better for them. I'm sure some cases people can do for themselves. I could (but won't) name someone who paid £700 for the bank charges refund. I told them to do it themselves but "It all takes time" was the answer I got. Can't help some people.

pinkshoes

RobM99 said:

"No win, no fee" companies are only going to take cases they know they can win, surely? The simpler the better for them. 

Yes, and this was simple as the company had admitted liability. The issue is the "fee" bit as the OPs neighbour seems to have agreed to some ridiculous charges that may not be recoverable from the company, so the fee is likely to end up more than the pay-out! 

yell_stone

Has he taken out any After The Event (ATE) Insurance?

Solicitors usually recommend clients take out this insurance, some will help you organise it too, to cover the legal costs which a Claimant must pay to a defendant when a claim is unsuccessful.

DullGreyGuy

Malthusian said:

What is the "deduction cap" specified in the Conditional Fee Agreement he was issued, and is referred to in the letter? In £ and p?

Its not in £ and p, the laws around conditional funding agreements for personal injury cap the success fee at 20% of the award for damages.

yell_stone said:

Has he taken out any After The Event (ATE) Insurance?

Solicitors usually recommend clients take out this insurance, some will help you organise it too, to cover the legal costs which a Claimant must pay to a defendant when a claim is unsuccessful.

Its the solicitor that takes out the ATE not the claimant


How much are they attempting to claim for their injury? This will determine which track of the court system the claim goes into and therefore what cap there may be on the fees the solicitor can claim from the third party. 

If they dont understand the letter they should be asking the solicitor to explain it but its two years on now so feels that horse has already left the stables, had a life and may already be glue now. The letter has to cover various scenarios such as if they discontinue the action (in which case the ATE doesn't cover anything) against the solicitor's recommendation or if they turn down a Part 36 offer but dont manage to achieve a better result in court. 

Assuming they win their case then most the disbursements will be paid for by the third party however a few items may not be, most notably often is the ATE insurance which ceased to be an allowed recoverable circa 2013

Rob5342

RobM99 said:

"No win, no fee" companies are only going to take cases they know they can win, surely? The simpler the better for them. I'm sure some cases people can do for themselves. I could (but won't) name someone who paid £700 for the bank charges refund. I told them to do it themselves but "It all takes time" was the answer I got. Can't help some people.

Not necessarily, they could betaking a chance on some of the cases that could go either way. They are obviously going to make sure they make profit overall which will be at the expense of the client somehow.