Before engaging a personal injury lawyer in Queensland it is essential that you understand their Costs Agreement. This article outlines the key questions you should ask your lawyer before signing their Costs Agreement.
1. What is a Costs Agreement?
A Costs Agreement is a legally binding document that outlines the terms and conditions of the lawyer-client relationship, including the type of work your lawyer will undertake for you and how and when their fees and expenses will be paid by you.
2. Do you charge on a no-win, no fee basis and what does that mean?
Many personal injury lawyers charge on a no-win, no fee basis. This means that you do not have to pay any legal fees upfront. No-win, no fee usually means that you only pay legal fees and outlays if your case is successful. It is important that you understand what the definition of “success” is in your Costs Agreement and the specific circumstances when you will not be required to pay legal fees and outlays. In some agreements the no-win, no fee agreement may apply to only fees and not outlays, and you may be required to pay outlays even if your claim is unsuccessful.
At L&H Injury Lawyers our no-win, no fee agreement covers you for both your fees and outlays if your claim is not successful.
3. How are your legal fees calculated?
Lawyers usually charge on either an hourly basis, a fixed fee basis or a combination of these.
If your lawyer charges on an hourly basis, you should make sure that you understand the hourly rate which will be charged by your lawyer, as well as any other staff members who may be working on your case. At many firms there are a team of people working on your case including the lawyer with day-to-day conduct, the supervising Principal and a paralegal as well as administrative staff. Having this many people including less experienced lawyers and paralegals working on your case can significantly increase your legal fees. This is why at L&H Injury Lawyers we only have experienced lawyers and administrative staff working on your claim.
Some lawyers charge on the Federal Court Scale which contains a combination of fixed fee and hourly rate charges. It is important to be aware that the fees charged under the Federal Court Scale can be relatively expensive. For example, under the current Federal Court Scale, the hourly rate is $720 per hour for attendances by a lawyer. This hourly rate is much higher than that charged by many personal injury firms. Additionally, the legal fees charged for some fixed fee items under the Federal Court Scale can be much more expensive than the fees would be if charged on an hourly basis.
Fixed fee arrangements are less common in personal injury cases but they are charged by some firms. Usually, they are charged on a stage by stage basis (i.e. you pay a fixed fee for each stage of your claim). If your lawyer charges on a fixed fee basis it is important that you understand the fee for each stage and whether there may be any variations and additions to those fees and, if so, in what circumstances.
Many personal injury lawyers in Queensland also charge an uplift fee top of their base hourly rate for running your case on a no win no fee basis. Some firms charge a second percentage uplift fee for ‘care and consideration’. It is important that you understand these additional uplifts as they will significantly increase your total legal fees (see further information in the paragraph below).
4. Do you charge uplift fees?
If you enter into a no-win, no fee cost agreement with a personal injuries lawyer in Queensland your lawyer is allowed to charge an uplift of up to 25% on top of their fees. For example, if your fees (based on your lawyer and their team’s time spent working on the file at their hourly rate) were $40,000 and an uplift of 25% is applied your fees will be $50,000. The rationale behind the allowance of an uplift is to compensate the law firm for acting for you on a no-win, no fee basis.
An uplift fee should reflect the risk associated with your case. If your case is not high risk then a lower percentage uplift fee should be applied (between the range of 0 to 25%). In practice, many cases carry little risk of being unsuccessful but nevertheless law firms still charge a 25% uplift on their fees. We think this practice is unfair.
In addition to the (up to) 25% uplift fee for running your case on a no-win, no fee basis, some firms will also charge an (up to) 30% fee on top of their legal fees for care and consideration. This means that some firms may charge you up to 55% in fees on top of their hourly rate. The percentage uplift charged for care and consideration should depend upon factors such as the complexity of the legal issues and the urgency of the matter.
At L&H Injury Lawyers we do not charge an uplift fee or fees for care and consideration. We believe this is unfair so we will only charge you for the work we do.
5. What cap on fees do you apply?
In Queensland, if you enter into a no-win, no fee cost agreement with a personal injuries lawyer to assist you with your personal injuries claim then there is a rule which will apply to your fees called the 50/50 rule.
The 50/50 rule prevents a law firm from charging you more than 50% of your settlement for their fees after refunds and outlays have been deducted.
The 50/50 rule is a compulsory rule which all personal injury law firms in Queensland must apply. Most personal injury firms apply this 50/50 rule.
Whilst a law firm is entitled to charge in accordance with the 50/50 rule, some firms offer their client a more advantageous cap than the 50/50 rule so it is important to find out what cap on fees your personal injury lawyer offers.
At L&H Injury Lawyers we believe that the 50/50 cap is unfair and that an injured person deserves the largest portion of their settlement. This is why we apply a 70/30 rule meaning we will limit our fees to 30% of the settlement.
For an example of how the 50/50 rule, compared to the 70/30 rule works in practice refer to our article “What is the 50/50 rule?”.
6. Do you pay for my outlays?
During your claim your personal injuries lawyer will need to spend money on things such as medical reports, medical records, expert reports and court filing fees. Ask your personal injury lawyer how these outlays will be covered during your claim.
Many law firms will pay for these outlays during the claim, and you will pay them back to your lawyer from your compensation at the conclusion of your claim. If this is how your lawyer operates you should ask whether there is any interest charged to you on the outlays and, if so, what the rate of interest is.
Some law firms will enter into a separate loan agreement with a 3rd party to fund your outlays. Generally, these types of loan agreements come with high fees and interest rates, with the fees and interest charged to you at the conclusion of your claim. If your lawyer is entering into a loan agreement to pay for outlays you should ask for a copy of the terms of the agreement, the interest rate and whether that interest will be paid by you or your lawyer.
At L&H Injury Lawyers we pay for your outlays on your behalf during your claim without charging you interest and without asking you to enter into a loan agreement with a third party.
7. Can I get an estimate of the total costs?
When your lawyer explains their Costs Agreement to you they are required to provide an estimate of the likely total costs (fees and outlays). It is difficult to provide a specific estimate of costs at the beginning of your claim. Your lawyer will usually provide a range of estimated costs. There are many factors which will influence the range of costs including:
- the complexity of proving that the other party is at fault for your injury;
- the nature and extent of your injuries; and
- the nature and extent of the losses that you have suffered as a result of your injuries.
Your lawyer should be able to explain to you the specific factors in your case that might influence where in the range of costs your case may fall.
If you have any questions about a personal injury costs agreement we can review this for you and provide free advice.
