A growing number of personal injury claimants could be losing thousands of pounds in compensation by opting for “no win, no fee” arrangements, according to new case analysis from Palmers Solicitors.
Conditional Fee Agreements (CFAs) are widely used across the UK and are often presented as the simplest option.
However, success fees of up to 25 per cent are typically deducted from compensation when a claim succeeds.
Jennifer Hitchen, Solicitor at Palmers says that while CFAs have their place, they are not always the most cost-effective choice, particularly in more clear-cut cases.
“If liability is clear from the outset, for example, a rear-end road traffic accident or an accident at work where fault is admitted early on, the risk of the claim failing is lower.
“In those circumstances, giving up a quarter of your compensation can be hard to justify. You are effectively paying a premium for a risk that may not really be there.”
Jennifer points out that “no win, no fee” providers operate on a commercial model and are incredibly selective about the cases they take on.
“Firms offering CFAs are unlikely to take a gamble on a case. Many of them make a point of highlighting that they will take on the case if they feel they are at least 51 per cent likely to win.
“If your case is accepted on that basis, is it not worth asking yourself whether it might also be strong enough to pursue without giving away a percentage of your damages?”
Palmers’ recent case study involved a claimant who chose to fund her case privately.
With liability resolved and costs recovered from the defendant, she retained the full value of her compensation, leaving her more than £9,000 better off than she would likely have been under a CFA.
However, Jennifer is careful to stress that outcomes depend on the details of each case.
Factors such as disputed liability or the complexity of the claim can affect legal costs, meaning privately funded claims are not always the more cost-effective route.
“Where liability is denied, or there are arguments around medical evidence or long-term prognosis, costs can rise quickly. In those cases, a CFA can offer some comfort for the claimant because they are financially protected if the claim doesn’t succeed.”
According to Jennifer, there are other benefits to privately funding your personal injury claim as opposed to going with a CFA.
“We tend to deal with a smaller number of cases at any one time, which means clients know who they’re speaking to. They can pick up the phone and speak to someone who knows the details of their case without being passed between teams or call centres.
“When someone is recovering from an injury, that continuity can make the process far less stressful.”
Jennifer believes there is a gap in public understanding about how funding choices affect outcomes.
“A lot of people don’t realise they have a choice. They see the adverts, hear ‘no win, no fee’, and assume that’s the only sensible route.
“There are situations where paying privately can leave you with a good chunk more in your pocket at the end of the case if you are willing to take that risk.”
Jennifer is encouraging anyone considering a claim to seek early advice and weigh up the strength of their case before committing to any agreement.
“For some people, a CFA will still be the right choice for their situation, but it shouldn’t be the default without a second thought. It’s a conversation worth having at the start so you understand the risks and potential costs involved in your matter and the odds of success.
“Once you’ve signed up to a success fee, that deduction is locked in.”