Professional Legal Costs: An Ongoing Concern

The evolution of personal injuries law has seen the contemporaneous development of “no win no fee” agreements between firms and clients. The arrangement can be quite mutually beneficial, allowing an injured person to engage legal services and pursue a claim without paying anything up front at a time when an injury may have affected their capacity to earn income and when they may have other injury-related expenses, such as medical fees. Likewise it allows firms to increase their number of clients, and hopefully their profits. Therefore, “no win, no fee” could equally be described as “win, win.”  

However, as with any form of business arrangement, sometimes the relationship can go bad. This is often due to the amount of money sought by a firm in payment of professional fees when compared with that ultimately received by the client, once the matter has resolved.

How this situation arises can be multi-factorial including a case where the investigations revealed that the value or the strength of the claim was not as high as initially thought or where the matter became more complex and therefore required more work on the part of the firm. When this happens, good communication with the client should assist in resolving any discontent.

One example of warranted client dissatisfaction is when a client is overcharged or mislead about legal fees. Apart from the financial damage to the individual, when this occurs it causes a major blow to integrity of the personal injuries claims process and the legal profession.  

The Courts and legal community have acted to prevent such occurrences and legal protections are now in place to prevent abuse of the “no win, no fee” system. In the case of Baker Johnson v Jorgensen [2002] QDC 205 the subject law firm charged the client more than they received in the settlement of their matter. The Magistrate described this as “misleading and inequitable and bordering on unconscionable” and, on appeal to the District Court, McGill DCJ (at paragraph 18) held:-

In my opinion, properly understood, the expression “no win no fee” is a succinct way of saying “the client will not have to pay the solicitor other than from the proceeds of the claim”. ... In my opinion the ordinary meaning and true construction of a retainer on a “no win no fee” basis is that the solicitor is saying in effect: “you will not have to pay me any fees except out of whatever I can recover for you.”  The effect is that the client will not have to pay anything out of the client’s own pocket.

Subsequent to this decision the Queensland Law Society issued a Ruling prohibiting a law firm from charging more than 50% of a settlement sum in professional fees. After a further case questioning the Queensland Law Society’s authority to do this (Holland & Anor. v. Queensland Law Society Incorporated & Anor. [2003] QSC 327), a section was issued into the Queensland Law Society Act (section 48IC) which has now been transferred to the Legal Profession Act 2007 (section 347) codifying the “50/50 rule”.

There however remains a presumption that a client  will be charged exorbitant legal fees in  personal injuries claims. Such a presumption derives from the media, anecdotes of family and friends and the individual’s own experiences with personal injury law firms.

Flowing from this uncertainty is the potential that many people will delay bringing a claim or speaking to a law firm for fear of being charged too much and this can have severe consequences on their ability to proceed with a claim given the strict times frames by which to do so.

When a client first walks in the door there is a lot of information a lawyer needs to both obtain and convey and it may be the first time this person has ever been exposed to such information. People are often apprehensive about being in a lawyer’s office in the first place and if they are suffering from a personal injury, this experience is compounded by the description of their accident and symptoms to a stranger. When the discussion turns to costs, and given the imbedded scepticism of the way in which legal fees are charged, this issue needs to be addressed thoroughly including how a “no win no fee” matter is run by that particular firm.

Some key points to consider if you are consulting a lawyer about a personal injury include:

  1. Do not delay in seeking legal advice. Not only could this prejudice your claim, but if urgent steps need to be taken before time runs out, these will cost more than steps taken if you consult a lawyer soon after your injury. In any event, you will not be liable to pay a firm’s costs until you provide your instructions for them to act for you.

  2. Ask who will be working on your file and what is their experience level? It often pays to have a more experienced solicitor or partner involved to ensure the effective running of your file.

  3. Once costs are being discussed, is the firm going to act for you on a ‘no win, no fee’ basis? Ask what the firm is ‘speculating’ or agreeing to do i.e. are they agreeing to take your matter to a certain stage in the claims process?

  4. Will you be responsible for disbursement/outlay expenses for example, medical reports, upfront? If a law from agrees to pay these on your behalf, these costs will come out of your settlement money in addition to the fees. There may be an interest amount or other administration fees associated with these so make sure you know what these fees are.

  5. How does the law firm ‘cost’ its files? For example, do they use a scale of fees and have you been provided with a copy of this scale, who assesses the file and what information are you given along the way about your fees?

  6. Has the law firm talked to you about the “50/50 rule” in the Legal Profession Act 2007? Ask the lawyer to explain what it means especially in relation to refunds or outlay expenses.

  7. You have a right to discuss your costs agreement/retainer with your lawyer and to seek independent advice your fees.

  8. Read the costs agreement/retainer carefully and ask questions where you do not understand.  

There may be ongoing stories about clients being dissatisfied with law firms and the legal fees they are charged however, hopefully with an individual’s greater awareness of what is fair and reasonable these will become more and more isolated.

It is important to trust your lawyer to conduct your file in your best interests however it is equally important to understand the process and costs yourself so that both parties are content with the outcome.

Posted: Wed, 15 Jun 2011 09:38:58 +1000 By: Kate
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