My client is making a claim for medical negligence against his hospital, re the death of his wife. He is using 'no win no fee' lawyers. They say he has a 50/50 chance of winning, in which case the compensation will be around £20000. They estimate their fees at £170000 and the insurance premium at £6000. The fees and premium will not be payable by my client, win or lose. I find it hard to understand the economics of this. How does anyone make money? Or are the lawyers hoping there will be a quick out-of-court settlement?
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You're right...
...it doesn't make sense.
Unless of course the compensation figure should be £200K rather than £20K!
But that doesn't explain why the insurers would accept a £6K premium to insure a 50/50 chance of having to reimburse costs of £170K. I don't know much about this sort of insurance, but I know that insurers are basically bookies in less flashy suits - and bookies certainly don't work that way, otherwise I'd be rich and the bookies would be poor. Whereas of course (and indeed off course) it's the other way round.