No Win No Fee Agreements
How They Work and What to Watch Out For

In personal injury matters, we offer to act on a “no win – no fee” basis.

 

Many firms offer “no win – no fee” services, but they are not all the same. It’s important that you understand what you are getting into before it’s too late.

 

table of contents

  1. Legal costs: The basics
  2. Too good to be true? Avoid this trap
  3. What is the average legal fee in a personal injury claim?
  4. Example #1: Minor whiplash injury
  5. Example #2: Serious motorbike crash
  6. Do we provide an itermised invoice?
  7. Do Bigger Claims come with bigger costs?
  8. Can costs change and do we update you?

 

Legal costs: the basics

The starting point is that in a legal case, we can divide legal costs into two categories. The first is “professional fees”. This is what your lawyer gets for doing their job. The second is “disbursements”. These are expenses your lawyer incurs on your behalf. For example, if your lawyer has to post a letter for $8.85, this postage expense is a disbursement that you will have to pay on top of your professional fees.

 

In “no win – no fee” agreements, you are generally not required to pay professional fees unless and until your case settles or you win at trial. Pretty straightforward so far.

 

However, what about disbursements? In a personal injury matter, disbursements can be significant. For example, if your injuries have to be assessed by a medical expert (they always do), this can cost $2,000 to $3,000 on average per medical expert. Who pays for this? Some firms will not require you to pay unless and until you win. Many firms will. 

 

At Denes Lawyers, when we agree to take on a matter on a “no win – no fee” arrangement, we do not require you to pay disbursements until settlement or judgment.

 

Too good to be true? (Hint – avoid this trap)

We said earlier that the 2 categories of legal costs are professional fees and disbursements. There is actually a third category: the defendant’s legal costs.

 

Why would you worry about the defendant’s legal costs? Shouldn’t the defendant pay for those? If your case settles, then you don’t have to worry about the defendant’s legal costs; the defendant will pay those from their own pocket. But what if your case doesn’t settle? What if it goes to trial? The general rule is that the loser pays some (60-70%) of the winner’s legal costs. So if you lose, you become liable to pay the defendant’s legal costs.

 

Some lawyers say that under their no win – no fee agreement, they guarantee that if you don’t win, you don’t have to pay anyone, including the other side’s legal costs.

 

Be very careful with any lawyer who makes these types of promises. Think about it: how can your lawyer guarantee that if you lose, you don’t have to pay the other side’s legal costs? The answer is simple: they can’t guarantee this, so anyone making you this promise is not prepared to take your case all the way to trial. They will try and push you into a settlement because that’s the only way they can protect themselves (not you) from the possibility of a trial loss. If you don’t do as they say (i.e. if you refuse to settle) then they will drop you as a client and you can look for a different lawyer.

 

At Denes Lawyers, we are very upfront and transparent with our clients. We tell you in writing if there are any risks in your matter, and you can make an informed decision whether you want to proceed. Don’t worry: we don’t give vague advices such as you have a 50-50 chance. We tell you how we see it. (Remember, for many years, Oszkar Denes used to represent defendant insurance companies, so he knows how the defendant perceives a matter and the tactics they might use.) But we do not give so called “guarantees” when they are in fact nothing more than traps designed to get you signed up and then to push you into an early unfavourable settlement.

 

What is the average legal fee in a personal injury claim? 

This depends on which firm you hire. Most firms in Queensland act on a speculative basis. This means your lawyer gets paid when your case settles or you win in court.

 

However, there is a big difference between how much firms charge. 

 

In Queensland, a lawyer can’t charge more than 50% of what you get paid in the hand from the settlement. 

 

This means that some firms automatically take 50% of your settlement amount. In almost all cases, this results in overcharging. 

 

The reality is that if you hire a competent lawyer, your legal costs shouldn’t exceed 25% to 33% of your settlement. That’s why in most cases we are able to cap our fee at 25% of the settlement amount if we do not have to file a claim in court. 

 

Example 1: Minor whiplash injury 

Our client was rear ended in a car accident in August 2019. 

 

 She suffered a relatively minor whiplash injury. She had to take a few days off work.  She then returned to full time work.

 

Our client also had to undergo physiotherapy for a few months after the accident. We arranged for the insurance company to pay for the physiotherapy costs. (It is quite common that insurance companies agree to do this in a car accident claim.) 

 

When our client’s injuries no longer improved (which means they became stable and stationary) we obtained an expert medical report from a specialist neurosurgeon. This cost $1,870 (GST inclusive).

 

The insurance company also obtained a specialist report at their own cost. Again, it is quite common for an insurance company to obtain a report at their own cost about your medical condition. 

 

We started negotiations with the insurance company. Their first offer was in the order of $10,000. 

 

Eventually we settled the claim for our client for $45,000. After paying medical bills and legal costs, our client got in her pocket $33,355. 

 

Take a look at the below chart which shows how our client received the majority of the settlement funds. The chart also shows how our fees compare to the total settlement funds. 

 

You will see that our client received 74% after legal costs and expenses. We kept our legal costs under 25%.

 

 

Example 2: Serious motorbike crash 

Our client suffered injuries while he was riding his motorbike.

 

This was a complicated claim. You will see in the chart below that we had to pay for a lot of out-of-pocket expenses while we represented this client. The reason was that there were two defendants. Both of them denied that they were responsible. We had to obtain expert reports in respect of the road conditions which caused our client’s injuries. In addition, we had to also obtain specialist reports from medical experts. These costs add up.

 

We conducted significant amount of investigative work in prosecuting this claim. We attended at police headquarters to inspect photographs. We tracked down witnesses and obtained their statements. We forced the defendants to review their own documentary records and we obtained valuable information from those documents.

 

Eventually, due to the overwhelming evidence which we obtained when we represented our client, the defendants gave up and agreed to settle.

 

You will see below the total settlement amount was $280,000. Our client received just under $200,000 in the pocket, which is a 70% recovery. Expenses amounted to 8% and our legal fees amounted to 22%.

 

It is important to appreciate that in many cases, we can keep expenses at a much lower amount.

 

In fact, if we think your case is worth much less, say for example in the $50,000 range, then we would not be incurring such high expenses. It would not be justified because this would unnecessarily reduce the amount which you get in your pocket. But this case was complicated, it was of significant value, and it was reasonable and necessary to incur these costs.

 

Our client was thrilled with the result, and he was particularly happy that he was not required to go to court.

 

 

Do we provide an itemised invoice?

Yes. As a client you have the right to ask your lawyer for an itemised invoice.

 

What is an itemised invoice in a no win-no fee agreement?

 

When your matter comes to an end,  you receive a tax invoice. It shows professional fees and disbursements (outlays) incurred in your matter. The itemised invoice details item by item what work was done in your matter. The benefit is that you see exactly what steps needed to be taken to secure compensation for you.

 

Do bigger claims come with bigger costs?

Yes, they almost always do.

 

We represent many clients with multiple injuries. For example, they might have a disc bulge which causes constant back pain. They might have also developed anxiety or even depression.  When we build up the claim, we would obtain multiple expert medical reports. At least one report from an orthopaedic surgeon or neurosurgeon, and then another one from a psychiatrist. 

 

So in this example, the costs of the reports add to the overall legal costs. (It may be possible to recover some or even all of these costs, depending on the type of claim.)

 

Another issue is that bigger claims might take longer because some of your injuries might take longer to settle down than others. We might have to obtain multiple reports from the same specialist in respect of the same injury just to see how it progresses.

 

can costs change from the initial quote and do we update you?

When we first meet, we provide you an initial estimate about how much our professional fees and disbursements are likely to be.

 

There might be several reasons why our initial estimate needs to be changed.

 

For example, at the first settlement meeting the defendant insurance company might be unwilling to pay you fair compensation. This doesn’t mean your client is not worth as much. It just means the insurance company is testing you. In this scenario, our responsibility is to advise you that you are probably better off if you continue to fight the matter, but that this also means your costs will be somewhat higher.  (Ultimately, these costs may be recoverable).

 

Our job is to keep you updated whenever there is a substantial change in our cost estimate, and to explain to you how that change has come about.

 

We regularly provide you advice about the progress of your matter. And we promptly update you if our costs estimate must be changed.

Free book offer: what to expect in your injury claim

Many firms try to rush you to sign up with them without carefully considering your options. We encourage you to first learn about your personal injury claim. You should ask yourself:

  • How do you calculate your compensation amount?
  • How should you choose your lawyer? Do you just choose by firm name regardless of who is really in charge of your matter? Has your lawyer ever argued a case in court?
  • What is a no win – no fee agreement? How much will it cost? 

Our book is available to you free of charge. You don’t have to be a client to receive this book. Head to the order page and we will be happy to send you a copy straight away.

Oszkar Denes Seven Deadly Sins that can wreck your personal injury claim

25% cap on legal costs

 

In Queensland, most compensation firms will charge you 50% of your compensation amount – the maximum allowed at law. This is very expensive. Our fee is different. We will cap our fee at 25% if we don’t have to file a claim in court. If we have to file a claim in court, then the cap is 33%.  Remember also, these are the maximum fees we will charge. If our fee in your claim is less, then we charge the lesser amount.

 

Before you engage us, we will provide you a written Disclosure Notice and a Client Service Agreement. These documents set out in detail the service we provide, as well as our fees and outlays. Before you sign anything, you can take these documents home with you, and study them with your family. You can take as long as you need, there is never any pressure from us. If anything in these documents doesn’t make sense to you, we can discuss it with you and you are free to ask another lawyer to give you advice.  And remember, no win – no fee agreements come with a 5 day cooling off period for extra peace of mind.