If you have been injured in an accident or are facing a legal dispute, the thought of hiring a lawyer and paying for their services can be daunting. However, in Queensland, there is an option that can alleviate some of your financial concerns – the 'no-win-no-fee' arrangement.

When a client engages a lawyer to assist in a personal injury compensation law claim, the way that costs are charged can create a misconception that an injured person who receives compensation for a personal injury could end up owing their lawyer legal fees in excess of the amount of compensation. In Queensland, there is legislation that limits the amount of professional fees that can be claimed in relation to a successful personal injury law claim. This limitation is often referred to as the ‘50/50 Rule’.

Compensation Claim Costs:

Costs associated with running an injury law claim are usually recovered out of any settlement money received. Whether an injured person claims compensation for a motor vehicle accident, workplace accident, or for injuries sustained in a public place, there are 3 main types of costs that will be payable:

1. Professional Fees – These are the fees for the legal services provided to you by your lawyer, such as discussions, preparation of documents, or engaging in settlement negotiations;

2. Disbursements – These are internal or external fees and charges incurred by your lawyer by 3rd parties on your behalf, such as medical practice administration fees, courier fees, stamping costs, etc.;

3. Refunds – In an injury law claim, if a person is successful in recovering compensation for their injuries, there are particular Government agencies and health providers that are also compensated for expenses incurred in relation to any treatment or assistance provided.

To assist in providing an explanation of how these different costs interact in relation to the ‘50/50 Rule’, let’s put a scenario in place...

John suffers an injury in the workplace and lodges a WorkCover claim. He obtains treatment through WorkCover for his injuries, along with using his Medicare card for additional GP visits and physiotherapy once his file at WorkCover is closed. Shortly thereafter and because of his injuries, John cannot continue with his employment and utilises Centrelink benefits until he finds alternative income. John then engages a lawyer to assist him in claiming compensation against his employer, which he is successful in achieving. At the conclusion of the claim, John owed the following:

• Professional Fees – $25,000.00;

• Refunds (Centrelink, Medicare, WorkCover) – $10,000.00; Disbursements – $10,000.00.

How does the ‘50/50 Rule’ apply?

Each personal injury compensation law case is different, and the ‘50/50 Rule’ will not apply in every claim. As a general guide but by no means exclusively, the larger the settlement amount the less likely the rule will need to be applied.

Using the above scenario, here is a practical example of how the ‘50/50 Rule’ is applied:

1. Let’s say that John was awarded a settlement amount of, for example, $100,000.00;

2. As there funds are deducted first, this would leave $90,000.00;

3. Next, the disbursements are taken off the remaining balance leaving $80,000.00;

4. Last, professional fees of $25,000.00 are deducted leaving a settlement balance for the injured party of approximately $55,000.00.

In this particular example, the ‘50/50 Rule’ would not need to be applied as the professional fees do not exceed more than half of the remaining balance after refunds and disbursements are paid. However, if the professional fees were $50,000.00, then the following would happen:

1. Settlement Amount: $100,000.00;

2. Refunds of $10,000.00 are then deducted, leaving $90,000.00;

3. Disbursements equating $10,000.00 are deducted, leaving $80.000.00;

4. Professional Fees of $50,000.00 would be discounted to $40,000.00 on account of the ‘50/50 Rule’, so that the injured party receives a balance of $40,000.00.

Summary:

1. Costs in personal injury compensation law claims in Queensland are separated into different components, namely professional fees, disbursements, and refunds;

2. Professional fees represent legal work performed in the conduct of your case, while disbursements and refunds are external to the legal work being undertaken by your lawyer;

3. The ‘50/50 Rule’ does not apply to every case, as it only applies when the professional fees exceed more than half of the remaining balance of a compensation claim after payment of refunds and disbursements.

And always be sure to review the contract of engagement or ‘Costs Agreement’ between yourself and your lawyer before signing, and take that opportunity to ask any questions that you may have. Obviously each situation is different, which is why it is important to seek legal advice as soon as possible after an accident.

It is important to note that these arrangements will be discussed in detail with you prior to entering into a retainer with us.