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 In General Compensation
How do personal injury lawyers charge

5 things you need to know about Personal Injury Lawyers; how they charge and “No Win No Fee” agreements

As personal injury specialists, people come to us at a difficult time, and face a lot of uncertainty about their health, finances and their legal rights.

We’re reminded that most of our clients haven’t ever needed to engage lawyers before, and most of what they assume or believe about lawyers is based on what they’ve seen on TV.

Unfortunately, American film and TV characters haven’t helped the image of the humble personal injury lawyer, and have fuelled myths about the way we represent and charge people who engage us to act for them.

How do personal injury lawyers charge

To set the record straight, I’m going to tackle the most common questions about costs, asked by clients injured in Victoria., Then I’ll give you 5 more questions that you should ask before you engage a lawyer for your personal injury claim.

1. Will I be charged to get initial legal advice about my claim?

Generally, personal injury lawyers will have a short initial discussion free of charge so that they can take basic details from you about your injuries and the circumstances that caused your injuries. At this stage they can usually advise you whether or not they can assist with a claim.

You should ask the lawyer to confirm, when you first contact them, that there will be no charge for the initial consultation (by phone or in person) and advice.

2. What if I don’t have enough money to pursue a claim?

In Victoria, personal injury lawyers generally offer to act on a “No Win No Fee” basis. This means that you do not need to pay for the work that the legal team does until you win your case and receive compensation.

The main reason they do this is because they believe that you have a reasonable chance of winning your case. They also understand that most people who have been injured are not in a financial position to pay for legal fees as they go.

Importantly, with “No Win No Fee”, it means you do not have to pay any of the law firm’s fees for the work they personally did on your case.

There may however, be some third party fees that your personal injury lawyer will ask you to pay as the case goes along or, if you lose your matter, that may still be payable at the end of the case. These are usually called disbursements and could include things like specialist reports and experts reports.

Not all lawyers will ask you to pay disbursements or third party bills as your case progresses, but it is possible that some will.

3. What if the costs are more than my compensation?

Costs charged by personal injury lawyers in Victoria are regulated under the Legal Profession Uniform Law (LPUL). This sets out a number of rules for lawyers about how they charge.

One of those rules focusses on “proportionality”; that is, that the costs charged need to be proportional to the compensation being sought.

So if a person tried to sue for $1,000, and the costs of bringing the claim were going to be $10,000, the lawyer would be prevented from charging that amount in relation to the claim.

At Polaris, the costs payable by you when you win your case are capped. Our clients always keep the majority of their compensation, so that you know that the costs will not outweigh your compensation. You can ask us about capped fees when you first meet with us.

4. So, do lawyers charge a percentage of the compensation?

Taking a percentage of a person’s compensation is called a “contingency fee”. While these types of agreements are popular in the United States, and are sometimes offered in large class actions, contingency fee agreements are not allowed in Victorian personal injury cost agreements.

Instead, personal injury lawyers generally charge based on the Supreme Court scale of costs. This is a schedule written by the Court which is a guide to how each piece of work is costed and valued. It is updated annually.

Most specialist lawyers in this field will charge at 120% of Supreme Court Scale, meaning that if the cost of drafting a letter is $100, they will be entitled to charge $120.

Some personal injury lawyers charge a loading or “uplift” on their fees of up to 25%.

This does not mean that they can charge fees of 25% of your compensation but rather, that if the work done by your legal team was $20,000, they would be entitled to charge up to 25% extra – totalling $25,000.

Polaris does not add loadings or uplifts to costs.

5. Will I be out of pocket if I lose my claim?

This is highly unlikely.

If you lose your claim (and you’ve done what you need to do under your cost agreement) you should not be required to pay for your lawyers’ fees. However, some personal injury lawyers will require you to pay for the bills or disbursements which have been paid to prepare the claim.

Polaris does not require our unsuccessful clients to pay for bills after a case has been lost.

In the highly unlikely event that your case goes to court and is unsuccessful, you may be ordered to pay the costs of the other side. Your lawyer should update you every step of the way, and tell you if there is a risk that your case is likely to go to court.

Polaris carefully guides clients through the legal process, working hard to prepare cases so that our clients don’t need to go to court to get the best possible outcome.

6. Does a “No Win No Fee” agreement mean that I will pay more?

That depends on a few factors, including whether you win or lose your claim.

If you’ve pursued your claim under a “No Win No Fee” agreement and your case is unsuccessful then the cost to you will be far less (or nothing at all) than if you had paid monthly bills to your lawyer.

If you win your case, the bill may be higher under a “No Win No Fee” agreement if your lawyer is charging an uplift or a loading on their fees.

Because Polaris does not charge an uplift, the fees at the end of the case are the same as if you had paid monthly bills.

You may think, why would a law firm offer not to be paid for all that time if it didn’t mean more money for them eventually? For Polaris, the reasons are that we make good decisions about which claims we believe will be successful, meaning that we don’t need to charge extra to cover the costs of pursuing claims that are unsuccessful.

Questions you should be asking your lawyer:

Now that we’ve covered off on the most common questions about how personal injury lawyers charge, here are the top 5 questions that you should ask a lawyer before signing a cost agreement:

  • Will I be asked to make payments for disbursements? How much? When?
  • Do you apply a loading or uplift on your fees?
  • Will I have to pay for disbursements if my case is unsuccessful?
  • What will I need to pay if I make a good recovery from my injuries and don’t want to go ahead?
  • Will you cap the costs which I need to pay so that I have certainty?
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