Summary of funding options for personal injury cases

In England and Wales there are specific court rules regarding legal costs in personal injury cases, including cycling claims. The rules changed in April 2013 and the below is a summary of the current rules.

Under the current system, if a claimant wins a personal injury case, the defendant to their claim will pay their legal costs, except for any additional ‘success fee’ under a Conditional Fee Agreement (CFA) and any insurance premium, as explained below. There are specific exceptions to this when the claimant might have to pay some of the defendant’s legal costs even though they have won their case, for example if they rejected a settlement offer and later received less compensation than the sum of the offer they rejected.  

On the other hand, if the claimant loses their personal injury case, the defendant will not pay the claimant’s legal costs and (in most cases) the rules prevent the claimant from having to pay the defendant’s legal costs either. There are also very specific exceptions to this, for example, if the claimant was dishonest. This system is called Qualified One-way Costs Shifting (QOCS). The system is intended to protect a claimant from having to pay their opponent’s costs if they lose their case, however, the rules are complex and there are exceptions, which your solicitor should explain to you.

Your solicitor should also explain the different funding options to you in detail. This is a very important decision to make and it is important that you feel comfortable with the option you choose and the risks.

 

Conditional Fee Agreements (CFAs)

This is the most common funding option. CFAs are sometimes called ‘no win no fee agreements’ but it is more complicated than that. Your solicitor should explain the CFA contract to you in detail before you sign it.

The principle behind a CFA is that your solicitor will not charge you their legal costs if you lose your case. Under the QOCS system you will not be liable to pay the defendant’s legal costs either, save for in exception circumstances (such as if you were dishonest). However, if you lose you might have to pay your own disbursements (for example court fees and expert fees) but your solicitor might advise you to take out insurance to protect against this risk, as explained below. If you win your case, the solicitor will charge you but it is the defendant who will be liable to pay most of your solicitor’s legal costs. 

Most CFAs include a ‘success fee’. A success fee is a separate legal cost which the solicitor can charge if the claimant wins their case. It is the claimant who must pay the success fee out of the compensation they receive. The success fee is calculated as a percentage of the base legal costs which the defendant pays. The success fee can be any percentage up to 100%, however, the amount which the claimant pays is capped at no more than 25% of the compensation for past financial losses and the injury (known as ‘general damages’). Your solicitor should tailor the success fee percentage to your case, factoring in the specific strength and weaknesses of your individual case. You can ask your solicitor the justification for the percentage. The cap system means that whatever the success fee percentage, the claimant should receive at least 75% of their compensation.

Often a claimant will take out an insurance policy to protect against the risk that they might have to pay the defendant’s legal costs or their own disbursements. This is not always necessary and your solicitor will advise what is needed in your particular case. If you do have an insurance policy, you will have to pay the insurance premium if you win your case. Generally the insurance company only charges a premium if you win. The premium will be deducted from your compensation but it comes within the 25% cap, along with the success fee.

You should check with your solicitor whether they will also charge you for any shortfall between the total amount of their base legal costs and the amount paid by the defendant.

 

Trade Union Funding

An alternative to a CFA is legal advice and funding from a trade union, if you are a member of a trade union. Your solicitor will ask if you are a member of a trade union and, if you are, they will explore whether this is the right funding option for you. It might be that your trade union will only fund your case if you use one of their panel solicitors, who might not be specialists in cycling claims. It is your choice which solicitor you instruct but, if you want to use your insurance to fund the case you can only choose a non-panel solicitor once your case has been formally started at court. 

 

Pre-existing Legal Expenses Insurance

Another alternative to a CFA is legal expenses cover in an insurance policy you already have at the time of the incident. Sometimes car, house or other insurance policies will include legal expenses insurance as an ‘add on’. It might be called ‘family legal protection’ or similar.

Your solicitor will ask you to check all of your insurance policies to see whether you have this cover and, if you do, they will explore whether this is the right funding option for you. As with trade union funding, it might be that your insurer will only fund your case if you use one of their panel solicitors, who might not be specialists in cycling claims. 

 

Damages Based Agreements (DBAs)

This is a less-common funding option. DBAs are essentially a variation on CFAs but rather than the claimant paying their solicitor a success fee calculated as a percentage of the base legal costs paid by the defendant, the claimant pays their solicitor a fixed proportion of their compensation (known as a contingency fee) if they win their case. The proportion can be up to 25% of the compensation for past financial losses and ‘general damages’ for the injury. The amount actually deducted from your compensation for the contingency fee will be reduced by the amount of legal costs the defendant pays your solicitor.

The practical effect of a DBA can be much the same as a CFA: something will be deducted from your compensation to pay your solicitor if you win and it is impossible to calculate exactly how much until the end of your case. Your solicitor will advise you whether their firm offers DBAs (not many firms do) and whether it is the best option for you.
 

Private Funding

Private funding means you pay your solicitor directly for their work, win or lose. If you win, your solicitor will seek to recoup their charges from the defendant, so far as possible. There will be no CFA success fee or DBA contingency fee so you will keep all of your compensation and there will be no panel solicitor restrictions.

There might be reasons why private funding is the best or perhaps the only funding option for your case, however, your solicitor must explore all of the options and advise you in detail. 
 

Public Funding, also known as Legal Aid

Public funding, previously known as Legal Aid, is no longer available for personal injury cases. There might be exceptional cases when it is available, for example, for an inquest in very specific circumstances.
 

Author Information

Ann Houghton

Specialist personal injury solicitor

Anthony Collins Solicitors LLP

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