How Do Solicitors Get Paid?

For every litigation matter or negligence claim on which a solicitor is instructed, there has to be a fee structure, or funding arrangement.  There are a number of ways in which a solicitor can charge a client, and a number of ways the client may seek to recover those charges from his opponent, ranging from private retainers to the more common Conditional Fee Agreement, more commonly known as “No Win No Fee” agreements.

The most basic funding arrangement is a private retainer, which usually means that the fees are calculated at an agreed hourly rate for work done by the hour, with monthly invoices being sent to the client for work done in that period.  For example, the solicitor might have agreed £150.00 per hour to act for a client, and spent 5 hours on the case that month.  The fee would therefore be £750.00 plus any VAT if appropriate for the month.  Assuming the solicitor spends a total of 10 hours on the claim, the fee would then be £1500.00 plus VAT if appropriate.

One of the most common funding arrangements for personal injury claims is a Conditional Fee Agreement, or “No Win No Fee”.  Here, there are no monthly invoices sent, and the solicitor agrees to postpone any payment until the end of the claim.  “No Win No Fee” means exactly that: if the case is unsuccessful, the solicitor does not charge anything to his client and receives no payment for the work done.  If it is successful, as a bonus or reward for that risk of not being paid, the solicitor is entitled to charge a success fee in addition to his basic charges.

So, assuming the success fee is 100%, if he charges £150.00 per hour as a basic rate, the solicitor is entitled to charge in effect £300.00 per hour, as he charges 100% on top of his basic fees.  Success fees can vary from 1% to 100% depending on the risks and nature of the claim, but the basic principle is always the same. In Personal Injury claims, the solicitor’s fees are recoverable from the opponent.  On a “No Win No Fee” funding arrangement, therefore, the client is never sought for payment, simply because if the claim fails the solicitor will not be paid and if it is successful he will look to the opponent for payment of the charges which would ordinarily be invoiced to the client.

On a private retainer, the client would seek reimbursement of his monthly invoices from his unsuccessful opponent.  In Employment Tribunal claims, a percentage of the damages recovered is taken in respect of fees.  This sort of funding arrangement is called a Contingency Fee Agreement, but such agreements do not extend to Personal Injury claims.

For further information on any type of funding arrangement, be it private or “No Win No Fee”, please call us on 01204 550 160 or click here