No Win No Fee in Northern Ireland Agreements after the 31st March 2013
A no win no fee in Northern Ireland agreement is a method of retaining a solicitor to run an injury compensation claim. If the claim fails there is a no-win scenario and provided the client has been honest with the solicitor, the fees of the solicitor are written off or cancelled. If the claim wins, however, the solicitor is then entitled to charge a fee often assessed on the hours expended on the case multiplied by an hourly rate. This is called “the base cost”. In addition, a solicitor winning a case is entitled to charge a success fee for taking the risk of not getting paid at all if the claim fails. The success fee varies from 12.5% to 100% depending on the case circumstances. The base cost and the success fee were recoverable from the losing party who had to pay the winning claimant’s costs. The solicitor also arranged a policy of insurance to insure the expenses paid out as the case advanced. The premium for the insurance was often paid at case-end and only if the claim succeeded. The losing party also paid the expenses and the premium for the insurance. In such a way all the costs were passed to the other side if the case won and if the case failed the expenses and any costs charged by the winning opponent were paid by the insurance.
From 2004 set fees or “predictable fees” for recovery from a losing opponent began to be introduced in road traffic claims, and these were halved in 2010. Nonetheless it was still possible to run a case without charging a single penny in costs to the compensation recovered.
Then on the 1st April 2013 it all changed.
The Government, at the request of insurers, introduced rules imposing very low fixed fees for the insurers to pay for the base costs; the fixed amount was so low that in most cases, claims could not be run for the fixed amount and the base costs not recoverable had to be passed to the claimant to pay out of the winnings. More rules prevented the recovery of the success fee from the losing opponent which had then to be charged to the compensation (though there was a compensation-cap of 25% on the amount of the success fee) and the insurance premium, (though much cheaper because of restrictions on the capacity of a losing defendant to recover costs) also had to be paid from the winnings. The only good news for personal injury claimants was that injury compensation had gone up by 10% to reduce the impact of the cuts.
In essence a no win no fee still means that you should pay nothing if the claim fails but you will recover less if you win due to the recent changes in the law.
The position is slightly better in clinical negligence case where about 75% of the insurance premium is recoverable if the claim succeeds.