Moped rider wins landmark court battle with ‘no win, no fee’ legal firm

A moped rider has won a landmark court battle with a ‘no win, no fee’ legal firm who charged her £1,780 over her successful £1,530 compensation claim – and which could now spark ‘£2.5billion’ of similar actions.

The new ruling came after accident victim Darya Belsner, 32, took her case – launched after she was charged more than she won – to the High Court.

Ms Belsner suffered cuts and bruises after being knocked off a moped by a car while riding pillion back in February 2016.

She instructed no win, no fee law firm CAM Legal Services – trading under the name Scooters and Bikes Legal – to claim for compensation and she was awarded £1,531.48.

But the solicitors took a total of £1,783.19 which included their fixed costs, a success fee, disbursements and VAT. The success fee amounted to £385.50.

Finding herself out of pocket Ms Belsner hired new lawyers to challenge the bill.

The case was heard in Sheffield District Registry of the High Court in July 2018 but initially found against her.

Undeterred, her lawyer appealed the ruling and at the High Court at Leeds Mr Justice Lavender found CAM should have properly explained their charges might be more than she could recover from the compensation bid.

Ms Belsner, 32, of London, said today: ‘It seems strange to think that my case could create millions of claims.

‘It was pretty much impossible to understand the charges particularly because no one sat me down to explain it in simple terms; especially as I was a person who was still in shock with what had happened with the accident.’

Darya Belsner, 32, took her case to the High Court after being charged more than she got back

The ruling means solicitors now must be able to prove clients were told at the outset what their likely costs were going to be and how much could be recovered from the opposing party. Ms Belsner will also now get £295.50 paid back to her.

It sets a legal precedent, a fact recognised by the two legal firms involved spending nearly £90,000 combined in arguing over the £385 success fee.

Legal costs analyst Mark Carlisle, of who acted for Ms Belsner, said: ‘This ruling will send shockwaves through the no win, no fee personal injury legal industry.

‘It will create millions of claims against them for overcharging and will turn this into the next PPI.

Legal costs analyst Mark Carlisle whose firm acted for Ms Belsner

Legal costs analyst Mark Carlisle whose firm acted for Ms Belsner

‘For too long legal firms have been using these complicated success fee models that their clients have not had properly explained and do not understand. This was why it was so important that we won this case and create a legal precedent.

‘No win, no fee law firms that have their fees challenged can no longer go to court and argue about their individual billing models because the judge has ruled if the solicitors can’t prove the client understood what they were being charged and how much of that they would get back from the other side, then the solicitors will need to make a repayment.

‘We very conservatively estimate in total these claims will be at least £2.5 billion

‘Government statistics show that there are an average of around 770,000 road traffic accident personal injury cases per year, an average of about 87,500 personal injury cases from accidents at work per year and 93,5000 personal injury accidents that arise from public liability accidents per year.

‘With these claims for overcharging stretching back to 2013- when the law around conditional fee agreements changed- and the average pay out likely to be £750 it could mean the total claims would be worth nearer £5billion.’ 

The legal principle on which Mr Lavender made his ruling was one of fiduciary duty which means solicitors have a duty to act in the best interests of their client.

Mr Justice Lavender commented: ‘No doubt similar issues could arise in many other cases. Consequently, the parties appear to attach considerable importance to this appeal.

‘According to their statements of costs, the Claimant and the Defendant have spent £52,575.63 and £35,139.70 respectively on this appeal. That is a total of £87,715.53, which is over 225 times the amount of £385.50 originally at issue.’

CAM Legal Services told MailOnline it was disappointed an earlier court decision had been overturned by Mr Justice Lavender.

Practice Manager Darren Draper said: ‘We genuinely believe he was wrong to ignore the fact that we, as a firm, did ultimately cap all of our unrecovered charges to £385.50 – a charge which was capped at 25% of her compensation.

‘Having considered the judgment carefully with our legal team we have taken the decision to seek permission to appeal from the Court of Appeal.

‘Helpfully, Mr Justice Lavender indicates that where a solicitor firm advises a client of what the overall cap would be on the client’s responsibility for unrecovered costs, then informed consent is likely to have been given and it will be reasonable for the solicitor firm to charge its client up to the level of that cap.

‘Since a large proportion of solicitor or client retainer documents do provide for such an overall cap, then this decision is only likely to affect those claims where no cap was provided.’ 

Rise of ‘free’ firms used by millions 

No-win, no-fee claims firms emerged in the Nineties, when the government restricted and later abolished Legal Aid for personal injury cases.

It meant those who signed the new Conditional Fee Agreements (CFAs) could make a personal injury claim without having to worry about paying legal costs if they lost.

The no-win, no-fee deals were first allowed for a range of court cases in England and Wales in 1995. 

No-win, no-fee claims firms emerged in the Nineties, when the government restricted and later abolished Legal Aid for personal injury cases

No-win, no-fee claims firms emerged in the Nineties, when the government restricted and later abolished Legal Aid for personal injury cases

Three years later, a move was made to extend them to all civil cases, with the exception of family courts.

It wasn’t long before TV adverts showing people falling from ladders or being involved in car accidents became commonplace.

The personal injury market is now valued at nearly £4 billion a year. But the practice has come under considerable criticism from those who believe they make money out of a ‘compensation culture’.

And the firms which use the agreements have been accused of making money from those who make claims against publicly funded bodies, such as the NHS.

Lawyers who use CFAs will say there is no gravy train, because firms lose money from unsuccessful cases.

In the past, these firms have also been accused of using unscrupulous means to get leads for new claimants.

Cold calls from staff asking whether you’ve been involved in an accident are still common. 

However, in 2012 a law was introduced to forbid companies who deal with drivers after a car crash, including mechanics and car-hire firms, from selling on clients’ details to personal injury lawyers.

Insurers have also become unlikely victims of the industry. Trade body the Association of British Insurers has blamed personal injury lawyers for soaring car premiums.

It says many insurers have had no choice but to increase the cost of cover, to meet the demand of payouts to claimants for injuries such as whiplash.

In a bid to tackle the high number and cost of whiplash claims and tackle fraud, the Government is planning to implement a Whiplash Reform Programme.