No win No fee insurance claims

Following on from the supreme court judgment on business interruption we are seeing a large number of social media posts from publicans regarding no-win-no-fee services, basically, law firms who are setting out to help businesses claim on their insurance policies.

What this means is that these firms do not require any upfront payment while the case is in progress. However, there are risks and hidden costs that may be associated with this arrangement, and if you don’t have after the event insurance cover you could be liable for hidden costs and charges.

It’s important that you appreciate, before signing up with a no-win-no-fee service, that your claim is commercial, costs awards made in the courts, later on, can be very unfair and render some claims pointless to the claimant who took them out so proceed with extreme care, consider ATE insurance and do your due diligence. The no-win-no-fee industry has had many criticisms over the years, read the case studies and warnings published by the Legal Ombudsman – download your copy HERE.

1. Hidden Costs and Charges

These are things like court listing fees, printing and copying, investigations, expert reports, and so forth.

You will most likely have to pay these costs regardless of whether the case is won or lost.

2. Respondent Costs

Legal teams representing any Insurance company may request that their legal fees be covered by you – this is a commercial dispute, after all, nothing prevents them from making such requests and applications. Take note this is only likely to occur if the case goes to court and doesn’t end up with a settlement (see below).

It is important to be aware that this can be very costly, costs in the region of six figures are common in commercial cases.

3. Settlement 

Most cases that seek compensation never actually reach court and are generally settled by the parties.

Settlement poses risks in a no-fee no-win agreement. For example:

If you settle, your lawyer will charge their legal fees, but, recent changes in the law mean that lawyers can no longer deduct their fees from compensation.

The fees are now paid after compensation has been received and some firms are charging as much as 50% in the wake of the supreme court

If the case is not settled, you may be advised that continuing (with the case) is not a good idea as the chances of success in court are not good.

So whether the case is settled or if you choose not to go ahead with court proceedings, you will still be held liable for the additional costs mentioned above unless you have covered them with (say) after the event insurance (ATE).

…….

Consider this, such are the costs of ATE premiums on large insurance claims that if you can afford the ATE premium then you can probably afford to pay a flat rate to a law firm that is not operating a no-win-no-fee service! Perhaps even more ironic is that if you cannot understand the fine print of the no-win-no-fee contract you are thinking of signing you may need to take legal advice which will also cost! Take this as a warning if you do not take out ATE cover you are effectively self-insuring. The agreement clauses in the contract you are relying on may not be covering all of your costs, if you are not sure you should consider alternative legal service providers.

PAS is more than happy to put publicans in touch with a legal service with a proven track record that do not operate on a no-win-no-fee basis (we get nothing for doing this) see our blog HERE for more details on accessing business insurance claims advice.