It's no secret that a lawyer’s cost agreement can be a confusing and complex matter. 

Filled with legal jargon and incomprehensible, indecipherable sentences, more often than not a claimant doesn’t really know what they’re getting into.

As a result, the majority are shocked by the legal bill they receive at the conclusion of their matter, leaving them feeling unhappy, deceived, and ripped off.

And, at the end of such an arduous process, that’s the last thing you want to feel.

To mitigate this, it's vital to educate yourself on the components of a legal bill before signing on the dotted line.

You need to understand:

  • What you're looking at;
  • What to look out for; and
  • When to ask the right questions.

This article will tell you just that, giving you all the steps you need to be on the forefoot of any unexpected charges.


The Three Components of a Legal Bill

A legal bill is essentially divided into three portions:

  1. 1
    Services fees;
  2. 2
    Disbursements; and
  3. 3
    Uplift/Care and Consideration (optional).

We group uplift with care and consideration because the majority of law firms won’t (and absolutely shouldn’t) charge for both. 

To ensure the charges for these three portions don’t outweigh the benefit of making a claim, the portions are restricted by a maximum threshold called the 50/50 rule.

The 50/50 rule is the overbearing 'cap' to what a no-win no-fee lawyer can charge. 

We'll touch on that one last. 

For starters, let's jump into the three portions this caps; starting with the easiest and most straightforward - a lawyer's service 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.


Service Fees: The Direct Cost of the Services Provided by your Lawyer

‘Service fees’ are more commonly referred to as 'professional fees', but for the purpose of clarity throughout this article, we'll refer to them as the former.

'Service fees' are what we use to describe the actual costs of the service being provided by a lawyer. 

Definition: Service Fees

‘Service fees’ are more commonly referred to as 'professional fees', but for the purpose of clarity throughout this article, we'll refer to them as the former.

'Service fees' are what we use to describe the actual costs of the service being provided by a lawyer. 

These are the fees laid out in a cost schedule given to you by your law firm. They are inclusive of things like:

  • Drafting documents;
  • Perusing letters;
  • Attending conferences and meetings;
  • Communication such as emails, texts, mail, fax, calls, etc.;
  • Preparing materials ;
  • Office incidentals.
SERVICE FEES

IMAGE 1: SERVICE FEES REFER TO THE COST OF THE DIRECT SERVICE BEING PERFORMED BY A LAWYER

These can be charged on an item-basis, time-basis, or an amalgamated basis

For example, Law Firm 1 might charge $20 per page of a document they peruse (item-based)

Law Firm 2 might charge $45 per 6 minutes it takes them to peruse a document (time-based)

Law Firm 3 might use a mixture, charging $80 per page for drafting documents, but $45 per 6 minutes for attending meetings (amalgamated)

The way in which a lawyer will charge varies, depending on what they find most beneficial to them (and hopefully to the client too). 

We delve more into item-based versus hourly-based cost schedules in our other article, and even provide a free audit so you can be sure you’re getting the best deal before signing on the dotted line. 

Regardless of how the firm charges throughout the duration of the claim, however, you’ll still be hit with one overall service fee at the end.

This service fee will become one portion of your complete legal bill.

For example, we’ll use the story of our hypothetical plaintiff, Kelly, and her lawyer, Craig. We’ve mentioned them in previous articles.

At the start of Kelly's claim, Craig handed her his cost schedule - the charges directly attributed to the services he was going to provide. 

COST SCHEDULE

IMAGE 2: A COST SCHEDULE GIVES AN ITEMISED BREAKDOWN OF THE COST FOR EACH SERVICE PROVIDED

She audited them and was happy with how it looked, so she went ahead with engaging Craig to be her lawyer. 

At the conclusion of her claim, Kelly received an itemised list of all the work he had completed for her.

His service fee came to $121,498.

This $121,498 became one of three portions of what Kelly would have to pay from her compensation.

Naturally, after considering how much the services themselves cost, you need to consider any associated costs that came with performing the service. 

That meant the next section Kelly moved onto were disbursements.

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.

Ask Your Lawyer

To find out more about the service fees of your law firm, you simply need to ask:
  • Do you charge on a predominantly hourly or item basis?
  • Do you charge in accordance with the court's scale of costs?

To find out more about the service fees of your law firm, you should read our article here on how to audit their cost schedules.

Disbursements: The out-of-pocket expenses a lawyer incurs to run your claim

Disbursements are the next part of your legal bill you'll want to consider.

Essentially, they're the costs incurred by a law firm in order to pursue your claim. 

Definition: Disbursements

Disbursements are the next part of your legal bill you'll want to consider. Essentially, they're the costs incurred by a law firm in order to pursue your claim.

Typically, this includes things such as:

  • Payments for court filings;
  • Payments for medical experts;
  • Payments for reports;
  • Payments for barrister’s fees, etc.
DISBURSEMENTS

IMAGE 3: DISBURSEMENTS REFER TO THE ASSOCIATED COSTS OF A CLAIM, SUCH AS MEDICAL REPORTS

Just how much you will be charged in disbursements depends on the circumstances and specificities of your claim.  

What’s also circumstantial is the interest you’ll pay on your disbursements. 

After all, a law firm has hundreds of matters running at once, each accruing thousands (if not hundreds of thousands) of dollars in disbursements. 

They have to take the loan from somewhere, and where they take it from will be the determinant of how much you pay in interest

Tip: Avoid Disbursement Interest

If you don’t want to pay the interest, you can opt to pay disbursements up front, out-of-pocket. However, given the financial position most people are put in after a car accident, this is not a common avenue for most.

A firm will often take a loan from one of two places:

  1. 1
    From their bank account; and
  2. 2
    From an external credit provider (otherwise known as 'litigation lenders').

Naturally, loans from litigation lenders incur much greater interest.

After all, that’s their sole business. They’re there to make money off these loans. 

Needless to say, the preference is to use a firm who takes money from their own bank account to pay for your disbursements.

Ask Your Lawyer

To find out where your firm is lending their money from, you simply need to ask:
  • Where do you get your disbursement loans from?
  • What percentage of interest is charged?
  • Are their any additional fees on top of the interest?

After you've considered the service fees and associated disbursement costs, you need to consider the last portion - uplift and care & consideration.


Uplift and Care & Consideration: The Risk Mitigation Costs

You might be wondering ‘how is there anything else that could possibly be charged to me!?’ by this point.

And that’s understandable, after all, we’ve covered the service you’ve received plus the associated costs - what else could there be?

Well, the final portion considers the more obscure, ambiguous parts of a claim - the risk of losing out, and the incalculable costs associated with the claim. 

These are called ‘uplift’ and ‘care and consideration’ (respectively). 

Now, before we get into this part and you get overwhelmed by an extra two sets of fees, it’s important to know that not every law firm will charge these, and those that do will generally only charge one

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.

Tip: The Uplift and Care & Con Hoax

Never be fooled by a law firm that advertises "we don’t charge an uplift fee" or "we don’t charge a care and consideration fee", because 9 times out of 10 they will charge the other. This is merely a marketing ploy.

So how are they different and which is better?

An uplift fee is an additional fee placed on no win no fee claims as a way for a firm to counteract the risk of potentially losing the case. As such, some refer to it as a ‘success’ fee. 

Definition: Uplift Fee

An uplift fee is an additional fee to counteract the risk of potentially losing the case.  

Care and consideration is mildly more complex, as it is an amount charged for work that otherwise isn’t outlined in the court’s scale of costs.

It compensates for work done, for which the scale doesn’t adequately provide given the nature or complexity of a matter. For example, it covers things like:

  • Multiple drafts of complex documents/letters;
  • Re-reading your file before a conference with you or before court;
  • Inter-office conferences where a number of solicitors meet to discuss the way forward on your file.

Furthering that, unlike uplift, care and consideration is a percentage tailored to each claim’s circumstances.

Some of these circumstances are:

  • The complexity of the matter;
  • The difficulty and novelty of any question raised in the matter;
  • The importance of the matter to you;
  • The amount involved;
  • The skill, labour, specialised knowledge, and responsibility involved in the carrying out the work;
  • The number and importance of the documents prepared or perused (without regard to the length of the documents);
  • The time spent by the solicitor; and
  • Research and consideration of questions of law and fact.

Essentially, both uplift and care & consideration are in place to mitigate the risk of losing the case, however uplift is applied as a generic percentage to every case, whereas care and consideration is assessed on a case-by-case basis. 

UPLIFT AND CARE AND CONSIDERATION

IMAGE 4: UPLIFT AND CARE & CONSIDERATION CAN BE LESS STRAIGHTFORWARD THAN OTHER FEES

Definition: Care and Consideration

Care and consideration compensates for work done, for which the scale doesn’t adequately provide given the nature or complexity of a matter.

This is why firms will generally charge one or the other (and absolutely should not charge both).

How are the percentages calculated?

As we said, an uplift fee is a more generic percentage applied to all no-win no-fee matters a firm is running. 

This percentage would be tailored to their win/loss rate and the personal amount they need to charge to mitigate those losses. 

By Queensland Law, an uplift fee cannot exceed 25% of the service fees (meaning disbursements are not included). 

On the other hand, care and consideration is a percentage of the service fees calculated based on the circumstances listed above. 

Unlike an uplift fee, Queensland Law does not cap the percentage charged for care and consideration.

For this reason, it’s of the utmost importance that you assess a firm’s cost agreement closely and check that they themselves employ a maximum threshold (ideally no more than 30%).

How do uplift and care & consideration fit into my legal bill?

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.

As we said, uplift and care & consideration are applied as a percentage to your service fees, not the disbursements. 

After all, the disbursements are a set fee (such as barristers fees).

It would be unethical and absurd to be charging ‘corkage’ on external fixed fees.

That means you need to find out the percentage your law firm will be charging (ideally before agreeing to their client agreement and apply it to the service fees. 

For Kelly, we said that her service fees came to $121,498.

If Craig charged an uplift fee at the maximum of 25%, he would be requesting an extra $30,375 in fees to account for the risk he incurred taking on her claim. 

On the other hand, if Craig charged a care & consideration amount and deemed 30% to be a reasonable amount for Kelly (quite a difficult claim), he would be requesting an extra $36,499 to account for the additional work required for the complexity of the matter. 

For the purpose of the example, we’ll say that Craig was charging care & consideration and not uplift.

That would mean his service fees, including the additional fee, would come to $157,997.

And that’s a lot of money. 

Who’s to say Craig didn’t just ‘claim’ the work was hard and the care & consideration fee was ‘necessary’?

Well, in order to protect Kelly's best interests (and the everyday claimant), the law implemented a ceiling to speculative fee arrangements - the 50/50 rule. 

Ask Your Lawyer

To have the best understanding of what additional fees you could be up for, you simply need to ask:
  • Do you charge a care and consideration or uplift fee?
  • What maximum percentage are your care and consideration or uplift fees?
  • Could you estimate my care and consideration or uplift fees?

The 50/50 Rule: The Price Ceiling

The final (and arguably most important) component to understand is the 50/50 rule. 

This isn’t another fee, but is instead the equation used to put a ceiling over your total costs (service fees, disbursements, and uplift or care & consideration). 

Designed with the objective "to ensure that claimants are not worse off financially after pursuing a legitimate personal injury claim" (LSC, 2019), it essentially puts an upper limit on the professional fees a law firm can charge to protect the claimants best interests. 

The 50/50 rule was implemented to ensure claimants aren't worse off after financially pursuing a legitimate personal injury claim.

That upper limit is 50% of a client’s payout for any speculative fee agreement.  

Definition: Speculative Fee Agreement 

A speculative fee agreement refers to a fee agreement where the lawyer has agreed to only be paid for services and disbursements in the event of successful recovery of damages.

In short, that means it applies to no-win no-fee agreements (the lawyer is only paid if they’re successful).

The Statutory Formula

The formula can be intimidating at first glance, but don’t worry.

We’re going to break it down into smaller, more manageable chunks.

Straight from the Legal Professions Act (LPA), we get a raw equation that looks like this:

[E-(R+D)] x 0.50

Where:

  • E = settlement offer
  • R = statutory refunds (refunds to workcover, medicare, centrelink, etc.)
  • D = disbursements

If we were to replace the letters with their meanings, we get something a bit more manageable:

[Settlement offer - (statutory refunds + disbursements)] x 50%

Settlement Offer

Your settlement offer is the amount the insurer or other side has agreed to pay to cover your damages.

Definition: Settlement Offer

Your settlement offer is the amount the insurer or other side has agreed to pay to cover your damages.

SETTLEMENT

IMAGE 5: SETTLEMENT REFERS TO THE AMOUNT AGREED ON BETWEEN A CLAIMANT AND THE INSURER

Your damages are essentially how much money you have lost since the accident, and how much money you will lose projected into the future. 

Simply put, it's the amount you receive in your hand at the end of a compensation claim. 

With fees of $121,498, it would be fair to assume that Kelly's settlement was roughly $330,000. 

Naturally, that’s a lot of money to most people. But before getting too excited, she needs to consider any statutory refunds that might need to be paid back.

Statutory Refunds

Statutory refunds refers to any monies that you owe back to Centrelink, Workcover, or other government bodies that might have awarded you a source of income since the accident.

Definition: Statutory Refunds

Statutory refunds refers to any monies that you owe back to Centrelink, Workcover, or other government bodies that might have awarded you a source of income since the accident.

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.

The reason for needing to pay them back is because they are there to protect lost income... so is compensation.

By receiving a lump sum compensation payment, you negate the need for statutory involvement. 

When you hear the word ‘refund’, it’s easy to think you’re losing money, however, in actual fact, your statutory refunds don’t leave you at a loss compared to those who had no refunds to make - it just means you’ve received this money earlier than non-government supported counterparts.

For example, Kelly's injury might’ve reduced her capacity to work by half.

Because she was still able to work and she didn’t think her injury was too bad, she went on Centrelink to make up for the loss of income. 

After 3 months of receiving Centrelink payments of $235 per week, she realised she wasn’t going to get back to work anytime soon.

GOVERNMENT FUNDING

IMAGE 6: A LOT OF PEOPLE REALISE THAT GOVERNMENT FUNDING WON'T BE SUFFICIENT

To mitigate the growing losses, she decided to pursue a CTP claim.

She commenced her claim and, at the recommendation of her physio, left her job to focus on getting better. 

The next 12 months of her claim meant receiving an increased income from Centrelink of $480 a week

Centrelink then calculated how much of that they are to claim back and arrived at a figure of $22,850.

The amount you pay back isn't exactly what you've been given. That's because another formula applies for this. We go into greater detail about how Centrelink refunds are calculated in this article

But for simplicity purposes in this article, we'll just use a total of $22,850 for statutory refunds.

This $22,850 is accounted for in a head of damage covered by compensation - past economic loss. That is, your loss of income between the date of the accident and date of settlement. 

Should she had not received the Centrelink benefits throughout her claim, she wouldn’t have any statutory refunds to make, but she would’ve been out of pocket for any expenses along the way, as opposed to having it covered by a government fund. 

This means regardless of whether the money came from Centrelink or the insurer, she's still received this $22,850, whether or not it was at the start of her claim or end of it.

If you want to read more about how Centrelink and other statutory entitlements might affect your claim, you can do so here

Now that we’ve considered any deductions or refunds that might need to be made, we can move onto disbursements.

Disbursements

We outlined disbursements earlier in this article as being the costs associated with your lawyer performing their service to you.

This amount can vary greatly between claimants as it is wholly dependent on the circumstances of your claim

A junior barrister’s fees can start from $5000 per day in court. And whilst the majority of cases don’t make it to court, some will still use a barrister for quantum advice, and some won’t at all. 

For example, we’ll suggest that Kelly's disbursement costs came to $16,781. 

Next, we’ll put them into the statutory formula to find out the maximum amount she can be charged.


Putting it all together

Now that you understand the three main portions of a legal bill, you can start to get an understanding for how a lawyer lands on the final percentage of compensation that they charge for.  all the legal bill components, you can work out the rough percentage you will be charged in your claim.

We recommend you download our free, interactive worksheet to help complete this section.

If we take a look at Kelly's, we can list them out as per the below:

  • Service fees: $121,498
  • Care and consideration: $36,499
  • Settlement offer: $330,000
  • Statutory refu​nds: $22,840
  • Disbursements: $16,781

Now we can jump into the first step - the statutory formula.

Step 1: the statutory formula

The first place a lawyer starts is putting the applicable figures into the 50/50 statutory formula.

If you take a look back at the formula, you’ll notice that you only need three of the total figures to calculate this maximum: 

  1. 1
    Settlement offer;
  2. 2
    Statutory refunds; and
  3. 3
    Disbursements.

For Kelly, they were $330,000, $22,840, and $16,781.

Let’s put that into the formula and calculate her maximum.

[Settlement offer - (statutory refunds + disbursements)] x 50%

∴ [$330,000 - ($22,840 + $16,871)] x 50%

= [($330,000 - $39,621)] x 50%

= $290,379 x 50%

= $145,189.50

That final figure is the upper limit Craig can charge Kelly for his services.

However, what’s vital to remember is that this is the maximum, not a set amount.

You’ll notice that Craig’s service fees came to $121,498 which is below the 50% maximum of $145,189.50.

By default, he can’t just charge the maximum.

Warning: Deceitful Lawyers

Many lawyer’s will say they charge ‘50%’, however this isn’t as clear-cut as they make it to me. 

If your lawyer doesn’t charge care & conduct or uplift, then this is the final step to calculating the amount you should pay in legal fees. 

Between the service fees and the 50% upper limit, you will pay the lower of the two.

For example, if Craig’s service fees were $10,000 above the upper limit, it wouldn’t matter. He can’t charge more than what the statutory formula calculated - $145,189.50. 

However, following our example, his fees fell below that limit.

That means if he were to hypothetically not charge an uplift or care & consideration fee, he couldn’t charge any more than the work he did which was $121,498. 

This situation is true if the lawyer isn’t charging the additional fee, however in most circumstances they will be charging uplift or care and consideration, so we’ll take a look at how they fit in in the next step.

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.

Step 2: Uplift and Care & Consideration

As we’ve said, uplift and care & consideration are charged as a percentage of the service fees.

That means you apply the percentage outlined in the cost agreement to the service fees you’ve received.

For Kelly, we said that Craig didn’t charge uplift, but charged a care and consideration fee of 30%. 

30% of his service fee ($121,498) is $36,499, so all we need to do is add the two figures together to get the complete fee - $157,997

Now, as we worked out in Step 1, Craig’s upper limit on this matter is $145,189.50.

That means he is eligible to charge the maximum 50%, however he must forfeit any money above the threshold - $12,807.50.

That’s not to say Craig will lose all of that money - he might, but he might not.

There's one more thing to consider when working out how much a lawyer can charge.

Fee recovery from the other side

The statutory formula only applies to the amount the lawyer bills their client.

It doesn’t restrict how much they can charge in total

In personal injury claims, it’s not uncommon to have a portion of your fees paid by the other side in the event of a successful outcome.

FEE RECOVERY

IMAGE 7: IT'S NOT UNCOMMON FOR NEGOTIATIONS TO FOLLOW AS TO WHAT AMOUNT THE CLAIMANT WILL RECOVER FROM THE OTHER SIDE

This doesn’t always happen, and the extent to which the other side covers your legal fees can vary, however it is possible. 

This fee recovery is a window of opportunity for the lawyer to not only recover the full cost of their legal fees, but also leave their client with more money in hand at the end of the claim. 

If you want to read further into depth about how fee recovery works, and what percentage you could be eligible for, you can do so in our article here

Let's take a look at Craig and Kelly again to see how this might work in the real world.

Kelly’s payout and the point at which the claim settled made her eligible for cost recovery on a standard basis under the District Court. 

That meant Craig could apply for 50% of his costs to be paid for by the other side. 

For simplicity purposes, we’ll propose that the court accepted his request for 50%. 

That means from his total bill (service fee PLUS care and consideration) - $157,997 - he could have $78,998.50 paid for by the insurer. 

That left Kelly with the remaining $78.998.50 - well below the 50% threshold.

In this situation, Craig has managed to recover all of his costs, despite being over 50% of Kelly’s compensation.

Naturally there are situations where Craig will still lose some costs even after recovery from the other side, but the most important part is that the maximum amount a claimant is charged will not change… usually.

Situations where the lawyer might charge more than 50%…

Very, very rarely a lawyer will apply to the courts to overturn the 50/50 rule for a specific matter.

This isn’t a concern for the majority of claimants, however, because it is only applied for, and furthermore approved, in extreme cases. 

These extreme cases are situations where a client has misled their lawyer and caused a lower than expected outcome.

This happens in situations where a client has not told the full story and it is brought to light throughout the claim, or they have been fraudulent in their evidence, etc.

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.

In a very simplistic example, let’s suppose Kelly told Craig that since her accident 14 months ago, she couldn’t work, she couldn’t do housework, she couldn’t even leave her house. 

Her physio and occupational therapist further encouraged this, recommending she only do low intensity housework and her assigned exercises. 

Due to this drastic reduction in quality of life and inability to work, Craig invested a lot of time and money into making a good case for a great deal of compensation for Kelly.

What Craig didn’t know, however, was that Kelly was completely able.

In fact, she was doing groceries, going to bars with friends, and even helping her mechanic husband out at his garage. 

teenage girl with sparklers at party

IMAGE 8: KELLY WAS A FRAUDULENT CLAIMANT, OFTEN OUT PARTYING WITH FRIENDS

The insurer saw past the lies and was determined her demeanour told a different story; not one of a bed-bound woman with a low quality of life.

They put CCTV on her and in no time gathered a mountain of evidence that completely discredited Craig’s entire case

As a result of her deceitfulness, she was awarded $35,767 - a far cry from the $120,000 Craig was aiming for.

This was a major issue because Craig had already invested $40,000 worth of time and outlays into building Kelly’s claim. 50% of her total settlement wouldn’t even begin to cover it, so instead he applied to the courts to have the limit lifted.

Given her disingenuous motives and the evidence Craig provided, the court waived the 50/50 rule in Kelly’s matter and awarded Craig 75% of her payout in legal fees

As you can see, charging more than 50% shouldn’t be the concern of any genuine claimant.

The ability to waive the 50/50 rule is reserved for law firms to use in the off-chance that their claimant has been fradulent and caused major losses as a result.


In summary...

To summarise, the three portions of a legal bill are:

  • Service fees: the direct cost of the service being provided by the lawyer;
  • Disbursements: the out of pocket expenses a firm incurs from pursuing your claim; and
  • Uplift or care & consideration fees: the fees to mitigate the risk of losing or the additional work put into a claim.

To protect a client from being overcharged, these 3 portions are regulated by a statutory maximum of 50%. This statutory maximum is found in the Legal Professions Act (LPA) and applies to any speculative fee agreement. 

In a different real world example, you could consider the charging somewhat similar to that of an advertising agency. 

If you were to engage the help of an advertising agency for your business, you’d be paying for the account manager assigned to your business. 

They’d be your ‘service fees’.

Next you’d have to pay for some of the costs they incur devising your advertising campaign. This could be software or the purchase of media, perhaps external consultants.

These would be your ‘disbursements’.

Next, they might charge a ‘success fee’ on top of their base rate. This could be a percentage of the targets you achieve on top of what was projected. 

This is similar to the ‘uplift fee’. 

You could apply this same concept to a real estate agent and selling your house and get the same outcome. Agency fees, associated fees, and the percentage that is their commission.

It's a standard pricing model for many service businesses.

If you want a checklist to audit your potential legal fees, you can download our easy to follow guide here.

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.


FAQ's

What are ‘professional fees’?

Professional fees are sometimes more easily referred to as ‘service fees’ because they refer to the direct costs of the service provided by a lawyer. This is for things like reading a document, writing a report, negotiating with an insurer, etc. 

What are 'disbursements'?

Disbursements are the ‘outlays’ or ‘out-of-pocket expenses’ a law firm incurs from pursuing your claim. This is generally for things such as court fees, report fees, barrister’s fees, etc. 

What is an 'uplift fee'?

An uplift fee is a percentage applied to each speculative matter that counteracts the risk of losing. In other words, a firm will charge a blanket ‘buffer’ on every speculative (no-win no-fee) agreement to protect them in the instance where they do lose and can’t charge for their services. 

what is a 'care and consideration' fee?

Care and consideration is a circumstantial percentage applied to no-win no-fee matters to compensate for the work done that isn’t adequately outlined in the court scales. This can be for things such as multiple drafts, re-reading documents, inter-office conferences etc.

What is the maximum a lawyer can charge?

A no-win no-fee lawyer cannot charge a client more than 50% of their payout. This comes under the 50/50 rule outlined in the Legal Professions Act (LPA). 

What is the 50/50 rule?

The 50/50 rule is a statutory formula applied to speculative fee agreements (no-win no-fee) to protect a client’s best interests. It outlines that a claimant cannot be charged more than 50% of their settlement amount minus any statutory refunds and disbursements. 

What are statutory refunds?

Statutory refunds refers to any monies that you owe back to Centrelink, WorkCover, or other government bodies that might have awarded you a source of income since the accident. 


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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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