1. No Win No Fee, Speculative Agreement
In many circumstances, Potts Lawyers will offer a ‘no win, no fee’ costs agreement, otherwise known as a speculative fee agreement, to assist clients to make a personal injury claim against an insurer.
This means that you will not have to bear the upfront legal costs of making a personal injury claim, nor will you need to enter into a pay-as-you-go arrangement, nor finance any related third party disbursement costs such as the provision of expert reports, from your own pocket.
We understand that should you suffer personal injury, your means to earn an income and pay daily living expenses will likely be affected, as you may find yourself unable to work while you are recuperating.
A no win no fee costs agreement effectively provides you with greater access to justice, ensuring you do not have to fund the upfront costs of retaining a lawyer to assist in making a personal injury claim against an insurer.
It is important to note however, that you will be liable to pay our legal costs, providing a successful outcome and settlement is achieved – awarding you compensation for the personal injury you sustained.
At Potts Lawyers, we pride ourselves on providing clients with comprehensive costs agreements and disclosure notices at the very outset of the matter. We also provide clients with fee updates throughout the course of their personal injury claim, and will seek clients’ instructions prior to incurring any third party disbursement costs such as expert reports to evidence and bolster the prospects of your claim. Our aim is to be upfront and clear on costs, so that there will be no surprises regarding the anticipated legal fees that will be deducted from any settlement sum your claim receives.
No win no fee agreements, are governed by legislation, and regulated by the Legal Services Commission. These speculative fee agreements are defined in the Legal Profession Act 2007 (Qld) as ‘conditional costs agreements’. Section 323 of the Act explains that payment of your legal fees is conditional on the successful outcome of your matter.
Should you require further information about ‘no win no fee’ speculative agreements, the Legal Services Commission has published a regulatory guide which can be accessed on their website.
The regulatory guide will provide information on the 50/50 Rule, which is discussed further below and in our client engagement documents that are provided to you when considering engaging our services to make a personal injury claim on your behalf.
2. No Uplift Fees
Potts Lawyers do not charge uplift fees.
Uplift fees can apply to no win no fee, speculative costs agreements. Essentially, a law firm can charge up to 25% extra, in addition to the legal fees incurred, for achieving a successful outcome in your personal injury claim. That is, the uplift fee is charge on top of law firms’ standard rates!
This practice is authorised by section 324 of the Legal Profession Act 2007 (Qld), and is regulated by the Legal Services Commission. Further information about uplift fees in no win no fee costs agreements are published in the Legal Services Commission regulatory guide accessible on their website.
It is important to understand however, that law firms do not have to charge an uplift fee.
Potts Lawyers do not charge an uplift fee as our aim is to provide you with the maximum amount of compensation ‘in the hand’ as possible. While we do provide a service, and charging fees for that service is an essential part of business, we do not believe uplift fees charged in excess of lawyers’ hourly rates, are morally appropriate.
We highly recommend you query your prospective lawyer on their position regarding uplift fees.
Care and Consideration
Not only do most law firms charge on uplift fee for a successful outcome in your personal injury claim, some law firms charge an additional uplift fee for ‘care and consideration’. These law firms assess how much your personal injury claim means to you (which, we would think, being justly compensated for your injuries means a lot!) as well as the complexity of your matter, and use this formula as an excuse to charge an additional uplift for the ‘care and consideration’ they must exercise in your personal injury claim.
The reality is that lawyers should always practice care and consideration when providing you with professional legal services. How much your personal injury claim means to you should by no means constitute a means to charge an additional uplift fee on top of the standard hourly rates already charged.
Again, this practice is allowable under the Legal Profession Act 2007 (Qld), and is regulated by the Legal Services Commission. However, law firms do not have to charge any uplift fees whatsoever.
Potts Lawyers firmly believe the practice of charging additional uplift fees is not appropriate. If firms charge up to 25% uplift for a successful outcome, and another 25% uplift for care and consideration, this can effectively increase your legal fees by 50%.
Potts Lawyers do not charge any uplift fees to ensure your greater access to justice, and to provide you with the maximum amount of compensation ‘in the hand’. If we agree to take on your personal injury claim, we believe you have good prospects of achieving a successful outcome, and we always ensure we practice our ethical duty to exercise due care and diligence on your matter – for no extra cost!
3. No Interest Payable on Disbursement Costs
During the course of your personal injury claim, you will need to obtain evidence to appropriately support your claim. This evidence could include, but is not limited to, obtaining medical records, reports from treating practitioners, independent specialist medico-legal reports, right to information requests, investigation services, and forensic accounting audits and reports.
These costs are incurred by third parties, and are therefore treated as disbursement costs in your personal injury claim.
Many personal injury law firms will either require you to pay these third party disbursement costs out of your own pocket or, if you do not have the money to fund these costs, they may refer you to a litigation lender. A litigation lender provides a line of finance to fund the costs of litigation, including disbursement costs, and like any financier will charge interest on the principal sum loaned.
Alternatively, many law firms will offer to fund your third party disbursement costs, but will charge interest on those out of pocket expenses up to the settlement of your personal injury claim. Some claims can span a year, sometimes up to three years, before they resolve. The interest rates charged by by law firms or litigation lenders are generally incurred at a higher rate those than offered by banks.
Over the course of the time it takes to resolve your personal injury claim, the interest on your disbursement costs can accumulate and ultimately equate to a significant expense.
At Potts Lawyers however, you will not be charged any interest on third party disbursement costs that we fund on your behalf for the purposes of obtaining the evidence needed to support your personal injury claim.
We urge you to query other law firms on their practice of charging interest or referring you to a litigation lender for these third party costs.
Again, Potts Lawyers’ aim is to provide you with the maximum amount of compensation ‘in the hand’ as opposed to eroding the settlement sum away with additional hidden costs such as uplift fees and interests charges. We believe it is your right to be justly compensated for the wrongdoing the caused your personal injuries and that law firms should not be unjustly awarded for assisting you with your personal injury claim.
4. No Charge for Secretaries or Assistants
Potts Lawyers do not charge for services performed by receptionists, legal secretaries or assistants.
Many of the larger personal injury law firms charge an hourly rate for their administrative team. This means if you call a law firm, you could be charged by a receptionist, who transfers your call to a secretary, who transfers your call to a paralegal, before you even get to speak with your lawyer! This is a sure way to secure the maximum amount of your compensation being eroded away in professional services costs.
At Potts Lawyers, we do not believe in charging a professional service fee for administrative support staff. You will only be charged an hourly rate for a qualified lawyer, or a law clerk or paralegal (at a highly reduced rate). Our fee structure ensures you are getting the most bang for your buck, and are only being charged for the professional services provided by qualified and experienced staff.
We do not believe it is fair for you to be charged for administrative services provided by support staff. These costs are all part of running a business, and should not be an additional charge to you in circumstances where there is no qualified or paraprofessional service being performed.
We will only charge for outsourced administrative services such as photocopying large and comprehensive materials for briefs and counsel – if such outsourced services are indeed required
Our aim is to ensure you receive the maximum amount of compensation ‘in the hand’. We do not believe it is morally appropriate to increase your legal costs by charging for administrative support staff.
We encourage you to ask your prospective personal injury lawyer about their fee structure and whether their firm charges for support staff. Potts Lawyers never has, and never will, engage in any practice that unfairly benefits the firm over and above your right to be justly compensated for your personal injuries.
5. 50/50 Rule
The 50/50 Rule applies to no win no fee, speculative costs agreements in personal injury matters. The rule developed to protect clients by restricting the maximum amount a law firm can charge when achieving a successful outcome in a personal injury claim.
The objective of the 50/50 Rule is to ensure clients are not financially disadvantaged by pursuing a personal injury claim.
The 50/50 Rule is set out at section 347 of the Legal Profession Act 2007 (Qld) which legislates legal fees in speculative agreements are to be capped to an upper limit.
Essentially, the maximum amount a law firm can charge is 50% of the total settlement sum, after all disbursements and statutory refunds (to government bodies such as Medicare, Centrelink, and WorkCover etc) are paid. The formula is succinctly expressed as follows:
Maximum Fees = [Settlement Amount – (Disbursements + Statutory Refunds) ÷ 2]
It is important to note that this formula only applies to compensation sums awarded in personal injury claims.
This method of calculating the 50/50 Rule was confirmed in the decision of Legal Services Commissioner v Dempsey  LPT 20.
Following this decision, the Legal Services Commission published on their website, multiple regulatory guides regarding no win no fee, speculative agreements and the correct interpretation of the 50/50 Rule.
The 50/50 Rule may be best interpreted with an example. Say your personal injury claim settled for $100,000 but, because of the amount of legal work required to obtain the settlement, your professional legal fees were $70,000, disbursements $5,000, and you owed a statutory refund to Medicare for $3,000.
In these circumstances, your law firm cannot charge full freight on the professional legal fees incurred by them. If they did, and all of the above amounts were deducted from your compensation award, you would only be left with $22,000 ‘in the hand’.
The 50/50 Rule becomes operational and is applied as follows:
Maximum Fees = [$100,000 – ($5,000 + $3000) ÷ 2]
By using this formula, the maximum fees a law firm can charge is $46,000 (including GST) which also gives you the sum of $46,000 ‘in the hand’.
Obviously, no party ever wants the 50/50 Rule to apply in their personal injury claim. It is more favourable to have a much lower legal fee expenditure, and much higher settlement sum awarded. Nevertheless, there are some circumstances that arise during the course of personal injury claims that are not conducive to an early and easy settlement, thus increasing your legal fees for the amount of work required to be performed by your lawyer. In these situations, the 50/50 Rule is applied so that you are not left with nothing, or less than your lawyer, out of the settlement sum.
The 50/50 Rule is a safeguard mechanism to protect your right to fair and just compensation for your personal injuries.
Most importantly, every personal injury lawyer is legislatively bound to operate within the confines of the 50/50 Rule when it comes to no win, no fee and speculative fee agreements. Please ensure your personal injury lawyer abides by this rule.