Published: 16 June 2017
Author: Michael Burdess
Six factors that effect how much you pay in legal costs
So, how much will it cost me?
This is often one of the first questions asked by our new clients suffering an injury, and it’s a very reasonable question.
While we would also like to give an accurate estimate of legal costs at a first interview, there are several unique factors that go in to estimating legal costs. This includes:
- The seriousness of the injury suffered
- The circumstances in which the accident occurred
- How long ago the accident occurred
- In WorkCover matters, whether there will be a claim for loss of earnings
- The likely attitude of WorkCover, the TAC or other insurers in relation to the case, and
- The level of risk the client is willing to take in pursuing their claim.
It can be challenging for both client and lawyer to to weigh up all those things in a first appointment. As more information is gathered, a good lawyer should be able to set out some of the scenarios that could occur in your case and the likely costs involved.
At Stringer Clark, new clients will also be provided with a “cost agreement and disclosure statement”, which will set out the lawyer’s estimate of what the legal fees will be in total and what will be recoverable from the other side in terms of those fees.
Does the law firm charge a percentage?
In personal injury matters it is common that lawyers will act on a "no win, no fee” basis if they take on a case.
Most people believe that this means that the injured person will pay a percentage of their settlement to their lawyers in payment of their legal fees. For example, there is a misconception that if a client were to receive a settlement of $200,000, they would pay a fixed percentage, for example 30%, being a bill of $60,000. This is in fact wrong. In Victoria there is a ban on contingency fees or charging a percentage of a settlement amount.
In personal injury matters, costs are calculated based on the work performed in relation to the case. An additional amount, known as an ‘uplift fee’, can be charged, but only if the work is performed on a “no win, no fee” basis. Again, an ‘uplift fee’ is not a percentage of the settlement amount. The uplift amount is calculated by referencing the cost of the legal work performed.
As an example, is a client’s case is resolved for $150,000 and the lawyer has performed $20,000 of legal work, the uplift fee can be up to 25% of that $20,000. That would mean that the client would pay somewhere between $20,000 and 25,000 depending on what the uplift fee amount is, which can range between 0-25% and is agreed in advance between the client and lawyer. The fee would be the same for the client whether the settlement was $150,000 or $300,000.
Will i be left with a big bill from my lawyer if we lose?
If you have entered into a "no win, no fee” agreement with your lawyer, it’s important to check whether the agreement covers ‘disbursements’. Disbursements include expenses such as court fees, fees for doctors reports or expert witness fees.
Not all "no win, no fee” agreements applies to disbursements. For example, there may be $20,000 in legal fees and $6,000 in disbursements. If a client were unsuccessful and the agreement excluded disbursements, they might get a bill from the lawyer for $6,000.
At Stringer Clark "no win, no fee” agreements do apply to disbursements, which means (as long as you have complied with the cost agreement) if your claim weren’t successful, you would not receive a bill from your lawyer.
If your lawyer is not offering an agreement that covers disbursements, you should consider asking them to extend the agreement to cover disbursements, or look elsewhere for a second opinion.
Most cases are successful, meaning that this never becomes an issue, but it is something that should address before signing agreements.