Oakwood Solicitors Returns Over £26,000 To A Client Suffering Substantial Injuries

Since the Herbert v HH Law case in April 2019, claims have risen for overcharged fees arising out of disputes from ‘no win, no fee’ claims signed by clients as their case is taken on by their Solicitor.

More recently, the Belsner v CAM Legal Services (2020) EWHC 2755(QB) case has also raised disputes as to whether the Claimant has agreed to fees being deducted from their compensation.

Arguments began over whether clients gave informed consent when signing up, or whether they were not fully aware of what fees may be deducted from a successful claim. Oakwood Solicitors Director Katie Bell discusses changes to ‘no win, no fee’ agreements, recent case law and shares her own case study highlighting how she and her team always put their clients first.

History of ‘no win, no fee’ agreements

‘No win, no fee’ agreements came into law in 1995, allowing would-be Claimants to walk away without cost if their claim is unsuccessful. Winning claims would see Defendants paying the Claimant’s legal fees, meaning that the Claimant would receive their full compensation sum.

This all changed in 2013 when the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (often called LASPO) was introduced. This Act saw that fees owed by the Defendant to the Claimant’s Solicitors were significantly reduced after a successful outcome. This led to law firms introducing ‘Success fees’, where the Claimant’s Solicitors would take a portion of the winnings to cover their remaining fees.

To be entitled to take this amount from a Claimant, the Solicitor has to establish they had suffered a shortfall in their costs recovered from the Defendant and that the Claimant had agreed to this being taken from their compensation.

The landmark Belsner v CAM Legal Services (2020) EWHC 2755(QB) case

This case discussed what informed consent meant in this situation, and how Solicitors would determine that Claimants were fully aware of what amount would be taken from compensation winnings to cover the shortfall in costs.

In this case, the Claimant suffered a road traffic accident and entered into a Conditional Fee Agreement (no win, no fee or CFA) with CAM Legal Services. Under their agreement with the Claimant, it stated specifically that if their costs exceed the amount recovered from the other party in the case, the Claimant herself would be liable for a 100% of the excess.

The success fee was capped at 25% of the Claimant’s compensation, but there was no overall cap placed on the amount Cam Legal could deduct from the Claimant to cover their shortfall in costs. Cam Legal recovered £1,916.98 in compensation for the Claimant and recovered £1,783.48 towards their costs. They took £385.50 from the Claimant’s compensation towards their costs.

They stated they had taken this as a capped 25% of damages, in line with a success fee under the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). It was not taken from the full amount of £1,916.98 as some of the damages were deemed to be of a future loss.

The Claimant challenged this decision, and the Court found that Cam Legal had not proven the Claimant’s informed consent when agreeing to them being able to recover their full shortfall in costs from her award. The Court of Appeal asserted the Claimant had not given her informed consent to the deduction of her damages, finding that the ‘no win, no fee’ agreement was unenforceable. The Claimant was then awarded a full refund of the deduction taken.

In this case, the Court found a Claimant would not give informed consent to an agreement that allowed a full recovery of the Claimant’s damages to cover a shortfall in the Solicitors costs. It demonstrated the importance of ensuring that clients are fully aware of the terms of the ‘no win, no fee’ agreement signed at the start of their claim and specifically how much they may be required to pay out of their compensation should their case win.

Oakwood Solicitors Ltd Case Study

Oakwood Solicitors was instructed to act on behalf of Mrs Tracy Leeson who suffered a fractured ankle after falling down the stairs at her workplace, due to her employers not having any safety measures in place. Mrs Leeson also suffered an osteochondral defect, a rupture to her ligament and a risk of accelerated arthritis. On top of this, she may have required further surgery in the future. She was off work throughout her claim due to her injuries and needed support from family and friends as a result.

Mrs Leeson had spoken to a few firms of Solicitors, but they decided not to take on her claim. Oakwood Solicitors reviewed her case and felt that there was a good chance of success. She signed up under a no ‘win, no fee’ agreement at the outset of her claim, which stipulated a provision to deduct 25% (plus VAT) of her compensation to recover any shortfall in costs. The agreement only allowed a maximum of 25% (plus VAT) to be recovered, and only in the event of any shortfall on their part. A success fee of 45% on Oakwood’s costs was also agreed, which can be no more than 25% of the compensation received.

The Claimant was awarded £100,000 in compensation. Oakwood initially advised that it would be taking it deduction, which came to £26,479.80 after future compensation had been deducted from the £100,000 settlement, and the additional sum of £358.40 to cover the optional ATE (After the Event) Premium that she took out. A Statute Bill was produced to show these costs, and they sought to recover fixed recoverable costs from the Defendant.

The full amount of costs was recovered from the Defendant in cost negotiations, meaning that Oakwood Solicitors was no longer entitled to keep any deduction from their Client, as there was no shortfall in costs. The full amount of £26,479.80 was returned to the client and she received 100% of her compensation. Mrs Leeson was delighted with this to say the least, commenting:

“I didn’t expect to receive any money back. Although I was told at the start of the case how it all worked, when I got the letter at the end of the case, I was over the moon. Oakwood Solicitors were brilliant. I would recommend them one million per cent!”

WHAT TO DO NEXT

If you have any questions about your claim, get in touch today for a free initial consultation in complete confidence. Choose one of the methods on the right-hand side of this page, or call us on 0113 200 9787 to find out how we can help you.

Source: Court orders costs repayment after client did not consent to deduction | News | Law Gazette