50% of personal injury claimants don't realise that they could be awarded thousands to have their legal fees covered.

The crushing concern for most personal injury claimants is the fees they'll face at the end of their matter. 

After all, we've all heard the horror stories of being getting charged 50%, 60%, up to 70% of their fees. 

What most don't realise, however, is that a percentage of fees is nearly always recoverable in the event of a successful outcome. 

By that, we mean the other side (generally the insurer) will be ordered to pay a portion of your legal fees in the event that you win your case.

But knowing just what percentage can be confusing and complex.

But that's what this step-by-step guide is here to do... break down the barriers of confusion and deliver clarity around just how much of your legal fees could be paid for by the other side

Before we dive in though, we need to understand the Court's Scale of Costs - what they are, and what they mean to your claim. Once we have an understanding of them, then we can start to work out what percentage of your legal fees could be recoverable. 


The key to Fee recovery - the Court's Scale of Costs

The Scale of Costs is the document used to calculate how much of your fees can be recovered. 

It is a document produced by the High Court that outlines the charges for items a court finds fair and reasonable. For example, drafting documents has a fee of $22.40/100 words (in the Supreme Court Scale of Costs). If your lawyer is charging within this range, than you can rest assured that you'll be able to recover a fair amount of their charges.

Just how much is fair and reasonable is dependent on:

  • Your payout amount,
  • At which part of the process the claim has settled, and
  • what offers were made in the process.

For example, what's considered a 'fair' and 'reasonable' fee for someone who's payout was $750,000, will be very different to what's considered 'fair' and 'reasonable' for someone who's payout was $50,000.

No matter your level of payout, these costs indicated in the scale of costs are what the court (/a cost assessor) bases their calculation of recovery of legal costs on.

By that, we mean your amount recoverable in legal fees is based on the Scale of Costs - not what's in your cost agreement. 

lawyer with costs scales

IMAGE 1: YOU WANT TO PICK A LAWYER WITH A COST SCHEDULE THAT ALIGNS WITH THE COURT'S SCALE OF COSTS

To get a better understanding of this concept, let's take our example of Craig, the lawyer, and Kelly, the hypothetical plaintiff.

We've mentioned them in previous articles

Let's suggest that Craig's total bill came to $145,779, after winning Kelly a total of $305,687 in compensation. 

A cost assessor would look at his bill and compare it to the scale of costs, coming up with a final figure the courts would deem to be fair and reasonable.

Let's suggest that figure was $131,594.

Kelly can then only be approved to recover a percentage of the $131,594, not the $145,799 she paid Craig.

If Craig had charged in accordance with the scale of costs (like some lawyers), Kelly wouldn't be losing any money. However he was charging outside the recommended parameters to avoid unnecessary losses.

Now, it's not uncommon to charge slightly out of line from the court scales, but you do need to be weary of someone charging too far out of line - so much so, that you too are leaving thousands on the table.

Inside this guide:

  • How a lawyer's hourly rates can be controlled;
  • How to make sure expensive lawyers aren't doing easy admin tasks;
  • How to maximise item-based charges and stop leaving money on the table;
  • How to understand a lawyer's cost agreement and schedule;
  • And more!

Get your free copy of our guide to controlling legal fees in a personal injury matter.

If you want to firstly audit your lawyer's cost agreement to make sure it's in line with the scale of costs, you can follow our step-by-step guide here

But, if you want to jump straight into working out how much of your fees could be recoverable, then keep reading. 


Compulsory Conference or Trial?

The first major determinant in working out what percentage of your costs are recoverable is predicting whether or not your matter will go to trial (court). 

court house

IMAGE 2: THE FIRST STEP IN CALCULATING RECOVERABLE COSTS IS TO DETERMINE WHETHER YOUR CASE WILL MAKE IT TO TRIAL OR NOT

We'll help you out by letting you in on a little secret - the majority of motor vehicle accident claims never make it to trial.

In fact, in the second half of 2016, exactly zero cases went to court in QLD (MAIC, 2016). 

And in FY 2016/17, 20 out of nearly 7000 claims went to court... that's about 0.28%.

Only cases that involve high contention ever make it to court. This is because it's a highly expensive and arduous process for an insurer, and they're generally better off just settling before court for a slightly higher price.

And cases that settle before court, generally settle before, at, or after a compulsory conference. 

Definition: Compulsory Conference 

A 'compulsory conference' is a meeting that is held around 12-18 months into a claim, prior to a matter going to trial. It's a meeting that gives both parties the opportunity to negotiate a payout, and potentially reach an agreement without needing to go to court. 

If a matter settles before, at, or after a compulsory conference (ie. it was settled before making it to court), the process for estimating legal fee recovery is fairly straightforward.

However, if you think you have a highly contentious claim and there's a chance of going to trial, you should consider reading the section at the end of this article so you can have a better understanding of what to expect.

If you're unsure, then it's best to read the article from start to finish so you don't miss out on anything important.

Do you think your claim will settle around your compulsory conference, or at trial?

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Step 1: your payout prediction

The first step in determining your recoverable fees is directly related to the amount you're expected to settle for

payout prediction

IMAGE 3: FINDING OUT YOUR PAYOUT ESTIMATION, OR YOUR 'QUANTUM', IS THE MATTER OF A SIMPLE DISCUSSION WITH YOUR LAYWER

Finding out this answer is the matter of a simple conversation with your lawyer. 

Once you have that rough figure, you can use Table 1 to make an initial determination of your recoverable costs. All you need to do is find where your settlement amount falls in the left hand column, before looking at the costs recoverable on the right.

Settlement Amount

Costs Recoverable 

$43,020 or less

Nil

More than $43,020, but less than $71,730

Maximum of $3,600

More than $71,730

An amount calculated on a standard basis under the appropriate court scale

TABLE 1: SETTLEMENTS UNDER $71,730 HAVE FAIRLY STRAIGHTFORWARD COST RECOVERY AMOUNTS

For example, Craig knew well in advance that Kelly's payout figure would be close to $300,000. 

He went through the table with her and pointed out that her settlement amount was more than $71,730, meaning it would be calculated on a 'standard basis under the appropriate court scale'. 

Settlement Amount

Costs Recoverable 

$43,020 or less

Nil

More than $43,020, but less than $71,730

Maximum of $3,600

More than $71,730

An amount calculated on a standard basis under the appropriate court scale

EXAMPLE 1: KELLY'S PAYOUT WAS OVER $71,730, MEANING IT REQUIRED A FEW MORE STEPS

As you can tell by the table, if your settlement is under $43,020, you're not eligible to recover any costs from the other side. 

If you're between $43,020 and $71,730, then you can recover a maximum of $3600 in fees. The exact amount will be negotiated between your lawyer, the cost assessor, and the other party. 

If you're over $71,730, then there's a few extra steps to take to work out your recoverable fees. We'll continue those steps now. 


Step 2: identifying the applicable court

If your predicted settlement amount is greater than $71,730, then you need to work out your recoverable costs using 'the appropriate court scale'.

supreme court

IMAGE 4: YOUR CLAIM COULD PROCEED THROUGH THE MAGISTRATES, DISTRICT, OR SUPREME COURT

To do that, simply refer to Table 2 to determine which court's scale of costs you need to be looking at.

Court

Monetary Threshold (Settlement Amount)

Less than $150,000

More than $150,000, but less than $750,000

More than $750,000

TABLE 2: YOUR PAYOUT ESTIMATION WILL DETERMINE WHICH COURT YOUR CLAIM (AND SUBSEQUENT SCALE OF COSTS) PROCEEDS THROUGH

For example, Kelly knew her predicted payout was roughly $300,000.

She used this figure to workout that her recoverable costs would be calculated using the District Court Scale of Costs.

Court

Monetary Threshold (Settlement Amount)

Less than $150,000

More than $150,000, but less than $750,000

More than $750,000

EXAMPLE 2: KELLY'S PAYOUT ESTIMATION OF $300,000 CAME UNDER THE DISTRICT COURT

Inside this guide:

  • How a lawyer's hourly rates can be controlled;
  • How to make sure expensive lawyers aren't doing easy admin tasks;
  • How to maximise item-based charges and stop leaving money on the table;
  • How to understand a lawyer's cost agreement and schedule;
  • And more!

Get your free copy of our guide to controlling legal fees in a personal injury matter.

Once you know which court scale you'll be recovering under, you can move onto translating it into a percentage.


Step 3: translating this to a recoverable percentage

The final step is to use Table 3 to convert your costs to a recoverable percentage.

We'll be looking at the 'standard basis' column for this since Table 1 explained over $71,730 was to be 'an amount calculated on a standard basis under the appropriate court scale'.

Standard basis simply means recovery for the bare essential work, not all of the work actually undertaken. This is opposed to indemnity basis, which generally allows recovery for nearly all work undertaken. Indemnity is more often used in cases that make it to trial - we'll touch on that soon.

To find the standard basis relative to your payout, simply look at the applicable row for which court you just identified in Step 2.

Court

Standard Basis

Indemnity Basis

Magistrates Court (awards up to $50,000)

20%

90%

Magistrates Court (awards over $50,000)

50%

90%

District Court

50%

90%

Supreme Court

60%

90%

TABLE 3: THE COURT YOU GO THROUGH DETERMINES THE PERCENTAGE LIKELY TO BE RECOVERABLE 

For Kelly, her payout came under the District Court which meant she was eligible to claim for roughly 50% of her legal fees to be covered.

Court

Standard Basis

Indemnity Basis

Magistrates Court (awards up to $50,000)

20%

90%

Magistrates Court (awards over $50,000)

50%

90%

District Court

50%

90%

Supreme Court

60%

90%

EXAMPLE 3: KELLY HAD AN EXPECTED COST RECOVERY OF 50% 


Putting it together

cost efficiency

IMAGE 5: THE MOST EFFECTIVE COST SCHEDULE IS ONE THAT ALIGNS CLOSEST TO THE COURT'S SCALE OF COSTS

Now that you have your percentage identified, you need to work on ensuring the lawyer's cost schedule you have (or will gain) aligns with the court scales so that you can recover the percentage closest to what you actually paid.

Like we explained in the beginning - if a cost assessor deems a lawyer's costs to fairly be under what they charged you, than you can only claim the percentage of the lower amount. 

If Craig charged $145,779, but a cost assessor found $131,594 to be more reasonable, then Kelly can only claim back 50% of the cost assessor's price - not the actual price she paid.

That means she could be leaving thousands on the table. 

If you want to ensure your audits are delivering the best value for money and promising the best return, you can follow our step-by-step audit here to make sure you know what you're getting into before it's too late. 


If the claim proceeds to trial and a judgement is entered...

A claim proceeding to trial comes with a few greater complexities than one that settles before. 

The recoverable costs now not only depend on the amount awarded in compensation, but also whether it was above or below each party's mandatory final offer.

legal negotiations

IMAGE 6: COST RECOVERY WHEN A MATTER HAS GONE TO TRIAL IS ALSO DEPENDENT ON THE OFFERS THAT WERE MADE PRIOR TO THE PROCEEDINGS COMMENCING

It's impossible to predict at this (likely) early stage what the other side will negotiate, and what the judge will award, so this section is better used to give you an understanding of what could happen in different scenarios, more-so than a clear-cut answer for your specific situation. 

The main difference between claims that settle outside of trial, versus those that settle within, is the fact you could still win your claim but be directed to pay some of the other side's legal fees.

This happens when the other party has offered you a mandatory final offer (MFO) in the compulsory conference that turns out to be higher than what the court awards you at trial.

As a result, you pay some of the other party's fees from the court proceedings to make up for the fact you didn't accept their MFO earlier and have caused the matter to go to trial. 

If this all sounds a bit overwhelming or daunting, don't worry. The majority of cases that make it to trial will involve a qualified solicitor who will step you through the process, knowing when is best to accept an offer, and when is best to haggle for better. 

Now that you understand the 'why', let's jump into the 'what'. 

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Scenario 1: Your Payout Is Less Than (Or Equal To) $43,020

$43020

Payout is less than your offer, but more than their's

Relationship to Offer

Costs Awarded

Payout is less than your offer, but more than their's.

No costs are awarded to either party.

TABLE 4: THERE ARE SITUATIONS WHERE NO COSTS WILL BE AWARDED TO ANY PARTY

For example, your lawyer's MFO prior to trial was $40,000. 

The other party's (the insurer's) MFO was $30,000. 

Being unhappy with their offer and certain you could get more, you proceeded to trial. 

The court examined the facts and ordered a payout of $35,000 from the insurer to you.

Because this is less than your offer, but higher than their's, there is no exchange of recovery for legal fees on either side. 

You receive the whole $35,000 and pay your legal fees from that. By the same token, the insurer pays for their own legal fees on top of the $35,000 they were ordered to pay you. 

Inside this guide:

  • How a lawyer's hourly rates can be controlled;
  • How to make sure expensive lawyers aren't doing easy admin tasks;
  • How to maximise item-based charges and stop leaving money on the table;
  • How to understand a lawyer's cost agreement and schedule;
  • And more!

Get your free copy of our guide to controlling legal fees in a personal injury matter.

Payout is equal to, or more than, your offer

Relationship to Offer

Costs Awarded

Payout is equal to or more than your offer.

You are awarded costs on an indemnity basis from the day on which the proceeding started, but no costs are awarded up until that date. 

TABLE 5: AN AWARD HIGHER THAN YOUR OFFER IS ALWAYS DESIRABLE

In this scenario, we can disregard what the other party's offer was as Tables 4 and 6 cover the two other scenarios.

In this case, let's suggest your lawyer's MFO prior to trial was $40,000. 

You were unhappy with the other party's offer, so you proceeded to trial. 

The court examined the facts and ordered a payout of $43,000 from the insurer to you.

Being more than what you had offered prior to court proceedings ($40,000), the insurer owes you money in legal fee recovery from the date of trial

From the date the trial commenced is the salient part of this.

The insurer doesn't have to pay any of your pre-trial costs. This could be 12 months of legal work by this point - say $12,000 of work. 

They do, however, have to pay your fees after the date the trial commenced on an indemnity basis.

An indemnity basis generally means 90%. This means if your legal costs after the $12,000 amounted to an additional $4000, they have to pay 90% of the $4000 ($3600). 

You receive the $43,000 ordered by the court. You receive 90% of your trial costs ($3600). And you pay your pre-trial costs ($12,000) plus what's leftover from the trial ($400). 

Payout is equal to, or less than, the other party's offer

Relationship to Offer

Costs Awarded

Payout is equal to, or less than, the other party's offer.

You pay the other party's costs on a standard basis (under the appropriate court scale) from the day on which the proceedings started, but you are not responsible for their costs up to that date. 

TABLE 6: IN SOME INSTANCES YOU WILL NEED TO PAY SOME OF THEIR FEES

In this scenario, we can disregard what your MFO was as Tables 4 and 5 cover the two other scenarios.

In this case, let's suggest the other party offered you $40,000.

You were unhappy with the other party's offer, so you proceeded to trial. 

The court examined the facts and ordered a payout of just $35,000 from the insurer to you.

Being less than what the other party had offered prior to court proceedings ($40,000), you owe the other party money in legal fee recovery from the date of trial

From the date the trial commenced is the salient part of this. 

You don't have to pay any of their pre-trial costs

You only have to pay for the cost of legal fees from the trial, and only on a standard basis (not indemnity). This is generally 20%.

This means you receive your $35,000 as ordered by the court. You pay all of your legal fees, which could amount to $16,000. You then pay their trial costs on a standard basis. If their trial costs were $4000, you have to pay them $800.


Scenario 2: The Payout is more than $43,020, but not more than $71,730

payout

Payout is less than your offer, but more than their's

Relationship to Offer

Costs Awarded

Payout is less than your offer but more than the other party's offer.

You are awarded costs on a standard basis under the appropriate court scale, up to a maximum of $3600. 

TABLE 7: SOME FEE RECOVERIES HAVE CAPPED LIMITS

For example, your lawyer's MFO prior to trial was $60,000. 

The other party's (the insurer's) MFO was $50,000. 

Being unhappy with their offer and certain you could get more, you proceeded to trial. 

The court examined the facts and ordered a payout of $55,000 from the insurer to you.

Because this is less than your offer, but higher than their's, the other party must pay for some of your legal fees on a standard basis (20-50%). 

This is regardless of whether the fees were incurred prior to, or during, the trial. 

Further to that, the other party only has to cover a maximum of $3600.

That means you receive your $55,000 as ordered by the court. Your legal fees came to $20,000, so the other party pays the maximum $3600 and you pay the remaining $16,400. The other party covers their own legal fees. 

Inside this guide:

  • How a lawyer's hourly rates can be controlled;
  • How to make sure expensive lawyers aren't doing easy admin tasks;
  • How to maximise item-based charges and stop leaving money on the table;
  • How to understand a lawyer's cost agreement and schedule;
  • And more!

Get your free copy of our guide to controlling legal fees in a personal injury matter.

Payout is equal to, or more than, your offer

Relationship to Offer

Costs Awarded

Payout is equal to, or more than, your offer.

You are awarded costs up to the date on which proceedings started on a standard basis under the appropriate court scale (maximum $3600); as well as on or after the date on which proceedings started on an indemnity basis.

TABLE 8: SOME FEE RECOVERIES HAVE MULTIPLE COMPONENTS TO THEM

In this scenario, we can disregard what the other party's offer was.

In this case, let's suggest your lawyer's MFO prior to trial was $60,000. 

You were unhappy with the other party's offer, so you proceeded to trial. 

The court examined the facts and ordered a payout of $65,000 from the insurer to you.

Being more than what you had offered prior to court proceedings ($60,000), the insurer owes you money in legal fee recovery.

The legal fee recovery they owe you is split into two sections:

  • Your costs up to the date of trial on a standard basis (20%-50%, at a maximum of $3600), and
  • Your costs from the date of trial on an indemnity basis.

That means you receive the $65,000 ordered by the court.

Your pre-trial legal fees came to $20,000, so the insurer pays the maximum $3,600 and you pay the remaining $16,400.

Your trial costs came to $10,000, so the insurer pays 90% of this ($9,000), and you pay the remaining $1000.

The insurer pays for all of their legal costs. 

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Payout is equal to, or less than, the other party's offer

Relationship to Offer

Costs Awarded

Payout is equal to, or less than, the other party's offer.

You are awarded costs on a standard basis under the appropriate court scale up to the date on which proceedings started (max. $3,600).


You pay the other party's costs on a standard basis under the appropriate court scale from the date on which proceedings started.

TABLE 9: SOME FEE RECOVERIES WILL BE A TWO WAY STREET

In this scenario, we can disregard what your MFO was.

In this case, let's suggest the other party offered you $70,000.

You were unhappy with the other party's offer, so you proceeded to trial. 

The court examined the facts and ordered a payout of just $65,000 from the insurer to you.

Being less than what the other party had offered prior to court proceedings ($70,000), two exchanges of fee recovery must happen:

  • The insurer must pay your pre-trial legal costs on a standard basis (20%-50%), with a maximum of $3,600; and
  • You must pay their legal costs from the date of trial on a standard basis (20%-50%).

That means you receive the $65,000 ordered by the court.

Your pre-trial fees came to $35,000, so the insurer pays the maximum $3,600 and you pay the remaining $31,400. You also pay your trial legal fees, which could amount to $5000.

The insurer's legal fees from trial came to $8000, so you pay 50% of that ($4000) and the insurer pays the remaining $4000 in their legal fees. 


Scenario 3: The Payout is more than $71,730

over $71000

Payout is less than your offer but more than the other party's offer

Relationship to Offer

Costs Awarded

Payout is less than your offer but more than the other party's offer.

You will likely be awarded costs on a standard basis under the appropriate court scales.

TABLE 10: SOME FEE RECOVERIES ARE STRAIGHTFORWARD

For example, your lawyer's MFO prior to trial was $90,000. 

The other party's (the insurer's) MFO was $80,000. 

Being unhappy with their offer and certain you could get more, you proceeded to trial. 

The court examined the facts and ordered a payout of $85,000 from the insurer to you.

Because this is less than your offer, but higher than their's, the other party must pay for some of your legal fees on a standard basis (50%-60%). 

This is regardless of whether the fees were incurred prior to, or during, the trial. 

That means you receive your $85,000 as ordered by the court. Your legal fees came to $40,000, so the other party pays 50% of this ($20,000). You pay the remaining $20,000 in legal fees, and the other party covers their own legal fees. 

Inside this guide:

  • How a lawyer's hourly rates can be controlled;
  • How to make sure expensive lawyers aren't doing easy admin tasks;
  • How to maximise item-based charges and stop leaving money on the table;
  • How to understand a lawyer's cost agreement and schedule;
  • And more!

Get your free copy of our guide to controlling legal fees in a personal injury matter.

Payout is equal to or more than your offer

Relationship to Offer

Costs Awarded

Payout is equal to or more than your offer.

You will likely be awarded costs on either a standard basis under the appropriate court scale, or on an indemnity basis.

TABLE 11: SOME FEE RECOVERIES ARE UP TO THE DESCRETION OF THE JUDGE

In this scenario, we can disregard what the other party's offer was.

In this case, let's suggest your lawyer's MFO prior to trial was $90,000. 

You were unhappy with the other party's offer, so you proceeded to trial. 

The court examined the facts and ordered a payout of $95,000 from the insurer to you.

Being more than what you had offered prior to court proceedings ($90,000), the insurer owes you money in legal fee recovery.

This legal fee recovery will be on a standard basis (50%-60%) OR on an indemnity basis - as determined by the court. 

That means you receive the $95,000 ordered by the court. The insurer pays your legal fees on a standard basis (for this example). If your legal fees came to $45,000, they will cover 50% of this ($22,500). You will pay the remaining $22,500 and the insurer will pay for all of their own legal fees. 

Payout is equal to, or less than, the other party's offer

Relationship to Offer

Costs Awarded

Payout is equal to, or less than, the other party's offer.

You could be ordered to pay the other party's costs on a standard basis under the appropriate court scale, from the commencement of proceedings.


You would likely be awarded costs on a standard basis up to the commencement of proceedings.

TABLE 12: SOME FEE RECOVERIES HAVE RULES DEPENDENT ON PRE OR POST TRIAL COMMENCEMENT 

In this scenario, we can disregard what your MFO was.

In this case, let's suggest the other party offered you $100,000.

You were unhappy with the other party's offer, so you proceeded to trial. 

The court examined the facts and ordered a payout of just $90,000 from the insurer to you.

Being less than what the other party had offered prior to court proceedings ($100,000), two exchanges of fee recovery generally happens:

  • The insurer will likely pay your legal costs up to the date of proceedings on a standard basis (50%-60%); and
  • You must pay their legal costs from the date of trial on a standard basis (20%-50%).

That means you receive the $100,000 ordered by the court.

Your pre-trial fees came to $35,000, so the insurer pays the 50% standard basis ($17,500) and you pay the remaining $17,500. You also pay your trial legal fees, which could amount to $15,000.

The insurer's legal fees from trial came to $18,000, so you pay that on a 50% standard basis ($9000) and the insurer pays the remaining $9000 in their legal fees. 


The Next Step...

The likely next step you'll want to go through is ensuring your lawyer is charging in accordance with the court scale of costs. 

To do this, you can read our step-by-step guide here that breaks down the complex process for you. 

Inside this guide:

  • How a lawyer's hourly rates can be controlled;
  • How to make sure expensive lawyers aren't doing easy admin tasks;
  • How to maximise item-based charges and stop leaving money on the table;
  • How to understand a lawyer's cost agreement and schedule;
  • And more!

Get your free copy of our guide to controlling legal fees in a personal injury matter.


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Disclaimer

The material on this page is provided for general information and educative purposes in summary form on legal topics which is current when it is first published. The information contained on this web site is general in nature and does not take into account your personal situation. The content does not constitute legal advice or recommendations and should not be relied upon as such.

Appropriate legal advice should be obtained in actual situations.


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