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More on no-win, no-fee claims

The announcement that the principle of no-win, no-fee is being abolished swings the pendulum against those who make frivolous claims.

It does, however, mean that those who do make a justifiable claim will not obtain full satisfaction as they will have to pay 17.5% of their claim to the solicitors (100- (110 - 110/4)). However the total costs of a claim will come down.

This can be exemplified in a recent motor insurance case. The costs previously were: Own damage 2,500, Personal injury 3,500, Hire car costs 3,000: Total cost 9,000 - but solicitor's fees 3,000 making a total of 12,000. Now it would be: Total cost: 9,900.

If this happens throughout the whole of the motor insurance market then obviously premiums should fall (or at least not rise). However many firms sell insurance online purely so they can get these referral fees! This means that they will have to change their business model and thus online motor insurance costs will rise much more than through a local insurance broker.

We welcome the idea of mediation rather than confrontation. Mediation is quicker and far less expensive.

We would recommend that customers take out personal and motor legal expenses unless already provided e.g. by trade organisation or union. The reduction in earnings for solicitors means that far fewer will take on smaller claims.

For more information contact JB Portwood

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