What Is The 50/50 Rule?

If you have a personal injuries lawyer in Queensland assisting you with your personal injuries claim on a no win, no fee basis then there is a rule which will apply to your fees called the 50/50 rule. It is important you understand this rule when choosing a lawyer to assist you with your compensation claim as it can impact your claim and the amount of money that you receive at the end.

The 50/50 rule restricts the amount that the law firm can charge you in fees and was introduced to ensure that those bringing a claim were not left out of pocket when pursuing a compensation claim.

The 50/50 rule stops a law firm charging you more than 50% of your settlement for their fees, after refunds and outlays have been deducted.

The rule is as follows:

Maximum Fees = Settlement Amount – Refunds and Outlays ÷ 2

For example, if your personal injuries claim settles for $100,000 and you have a refund to Medicare of $1,000, a refund to Centrelink of $4,000 and outlays of $5,000 for barristers fees and medical reports the 50/50 rule means the law firm cannot charge you more than $45,000 for their legal fees. The calculations are as follows:

If the law firm’s fees are $60,000 the maximum amount they can charge you under the 50/50 rule is $45,000. However, if their fees are $30,000 they can only charge you $30,000 and cannot automatically take half of your settlement.

Whilst a law firm is entitled to charge in accordance with the 50/50 rule we believe this is unfair and that an injured person deserves the largest share of their settlement. That is why we apply a 70/30 rule meaning we will cap our fees at 30% of the settlement. Applying that to the above example it would mean you would get $63,000 in your hand instead of $45,000 which will assist you to move forward with your life. The calculations are as follows:

The 50/50 rule also does not take into account the interest that may be payable on a loan entered into with a third party. If you enter into one of these agreements through another law firm this means that the interest must be paid from your share of the settlement meaning you get even less in your pocket. At L&H Injury Lawyers we fund the outlays for you so that you don’t have to enter into these loan agreements that charge high interest and fees.