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When instructing a personal injury solicitor, watch out for hidden extras such as VAT and insurance costs
The way solicitors charge for personal injury claims is complicated. That complexity can sometimes lead to injured people paying more than they need to in legal fees. It has become common place for personal injury clients to pay 25% of their compensation to their solicitors to cover legal costs, but not all firms treat VAT in the same way. Look at the small print and an advertised 25% deduction can quickly become a 30% deduction once VAT is accounted for*. Likewise, some firms add on the costs relating to insurance products, which means the actual deduction can be even higher. So, if you are told the deduction is 25% you might want to ask the following question:
If my case settles for £10,000.00, how much will I actually receive?
If the answer isn’t £7,500.00 then ask why not. If you aren’t satisfied with the response, then contact us. All of our clients are guaranteed to receive at least 75% of their compensation award.
Why does it matter?
| Compensation | 25% Cap | 25% plus VAT | Additional Cost to You |
| £10,000 | £2,500 | £3,000 | -£500 |
| £25,000 | £6,250 | £7,500 | -£1,250 |
| £50,000 | £12,500 | £15,000 | -£2,500 |
| £100,000 | £25,000 | £30,000 | -£5,000 |
If you are liable for ATE insurance on top of the deduction, then the amount of compensation you actually receive will be reduced even further. See below for an example of Express Solicitors deducting an astonishing 50% from their client’s compensation.
Background:
The explosion of ‘no win, no fee’ agreements in the late 1990’s triggered decades of misunderstandings, disputes and piecemeal reform to the way legal costs operate. What we are left with is a messy patchwork or overlapping schemes that can be difficult to follow, for both lawyers and clients alike. One big shift occurred in April 2013. Prior to this time if you had the need to instruct a solicitor for a personal injury claim, the chances are that you would not have to pay a penny. The losing party would pay your solicitor’s fees in full, and you would retain 100% of your compensation. That all changed in April 2013 with the introduction of the LASPO Act. This new law changed the way solicitors operate so now the part of your legal costs known as the Success Fee can no longer be recovered from the losing party’s insurance company. Instead, clients now contribute to their legal fees via a deduction from their compensation. To prevent solicitors from over-charging their clients, the new rules imposed a cap so that solicitors using a no-win no-fee agreement are only permitted to charge up to 25% of a client’s compensation, inclusive of VAT. In recent years, some solicitors have found inventive ways to get around that cap and now charge VAT in addition, taking the actual deduction to 30%.
What is ATE Insurance?
Along with changes to the Success Fees, the LASPO Act changed a significant long-standing legal principle about who pays the loser’s legal fees. Prior to 2013, if you pursued a personal injury claim but lost, you would be responsible for your opponent’s legal costs. This was a real risk, and most law firms advised clients to protect themselves by taking out a policy of legal expenses insurance. This insurance was taken out after the accident, and as such is known as ‘After the Event Insurance’ or ATE. These ATE policies would give clients the peace of mind to know that if they lost their claim, they would not face a big legal bill. In 2013 things changed. Since then, if a personal injury client loses their case, they are not required to pay their opponent’s legal costs, except in some very limited circumstances. As such, the need for insurance is much reduced. Whether or not you need to take out a policy of insurance is something you should discuss with your solicitor. It is not a requirement and nor do the premiums always represent good value. You will be personally liable for any ATE insurance premium, so it is important to establish whether the premium is included in the 25%/30% cap, or if your solicitor adds it on top. Moreover, it’s worth establishing if there is any financial relationship between the firm of solicitors and the ATE Insurance company, for example are they part of the same group of companies, do they have the same directors, do they pay commissions? –It’s good to understand who actually benefits from the insurance so you can make an informed decision about whether to proceed. Ask your solicitor if there is any financial relationship between them and the ATE insurance provider and make sure you are satisfied with the answer.
Case Study – Express Solicitors – client receives only 50% of their compensation
The case of Duffield v WM Morrison Supermarkets 2025 involved a child who was injured in a supermarket. It was revealed that Express Solicitors deducted an astonishing 50% from this child’s compensation to cover legal fees and ATE insurance. More reasons to shop around when looking for a solicitor! Our 25% cap is just that, there are no hidden add-ons.
Summary
Not all personal injury solicitors charge the same. It is true that 25% has become the ‘normal’ fee within the profession. But it pays to ask questions about whether that 25% includes VAT and ATE Insurance or if they are added on top. As the case with Express Solicitors demonstrates, this can make a huge difference to clients. You don’t need to spend 30%, 40% or even 50% of your compensation to obtain top-tier legal advice. Read more about instructing a solicitor here. Instructing the right firm could save you thousands of pounds. If you have recently instructed a firm but want to change your mind, remember you have 14 days to cancel the instruction. LLB Solicitors guarantees clients will always receive at least 75% of the compensation they are awarded. For our most seriously injured clients we can often charge a much lower percentage.
Get in Touch
If you’ve suffered an injury and need a solicitor you can trust, LLB Solicitors is ready to help. Our team combines expertise, experience, and compassion to ensure your claim is handled efficiently and successfully. Don’t face the legal process alone – contact LLB Solicitors today to start your claim and secure the compensation you deserve.
Call: 0161 989 9400 or 0800 880 7855, Email: info@llbsolicitors.co.uk or complete our Contact Form and we’ll get back to you for a free, no obligation discussion about your case.
*See Injury Lawyers 4U for an example of 25% plus VAT