Will my compensation end up paying for legal costs?

In Queensland there is legislation which prohibits your legal representatives from taking all or most of your compensation for legal costs, in personal injury claims run on a No Win No Fee basis.

Legislation has been put into place in Queensland so that you will always receive a fair amount of your damages, even if your legal fees far outweigh the compensation or damages you have received at the end of your claim.

This particular legislation is called the 50/50 Rule.

The 50/50 Rule only comes into play if our fees are higher than the amount calculated under the 50/50 Rule.

The Rule usually only applies in speculated No Win No Fee personal injury claims where only a minor amount of damages is paid and therefore the legal fees outweigh the compensation or damages paid. How the 50/50 Rule works is as follows:

Professional fees we can charge = [Total settlement amount – outlays + any statutory refunds)] ÷ 2 = Your in-hand amount

These are such things as fees for medical reports, obtaining medical records, filing court documents and engaging medical experts and barristers on your case, in order to achieve the best settlement or court judgement for your case possible.

Statutory Refunds are refunds that have to be made from your settlement monies to such places as Medicare, Centrelink and DEEWR (Dept. of Employment, Education and Workplace Relations).

You see, when you get Medicare to pay for any of your doctors visits or X-rays etc relating to your claim injury, these payments have to then be repaid to Medicare from your damages at the end of your claim, as this is the law.

However in reality, you are not really losing anything in respect to such refund payment because we actually claim the Medicare Refund as part of your claim, so you receive the refund to Medicare in your settlement amount to pay the Medicare Refund.

Similarly, if you receive any Centrelink payments because you cannot work during your claim, then in some cases these payments have to be repaid to Centrelink from your settlement because we will be claiming any lost wages because of your injury, and the settlement payment will include an amount for those lost wages.

So if Centrelink has paid you some of those lost wages when you could not work, then it has to be repaid to Centrelink at the end of your claim.

Also, DEEWR is a Government Department that provides retraining to injured persons through Centrelink. In some cases, DEEWR will provide retraining or return to work programs for injured workers and they will expect repayment of the costs of these programs from settlement funds, if they provide same due to the claim injury.

However, once again, if there was a DEEWR Refund applying to your claim, we would claim this refund in your claim and it would be part of the settlement amount you would receive anyway, so you can pay it back to DEEWR.

Basically, what the 50/50 Rule means to you is that a no win no fee personal injury law firm cannot charge you more than the 50/50 Rule as it applies to your case.

Chat live with us, call or email and we’ll be happy to discuss more.

So, now you know what all the terms in the above 50/50 Rule formula mean, this is an example of how the 50/50 Rule would work on a claim that settles for say, $50,000, where there have been outlays spent on the claim of $5,000 and there are statutory refunds of say Medicare at $1,000 only.

This means we would then calculate your in hand amount and our total professional fees (including GST) under the 50/50 Rule as follows:

• $50,000 less the outlays at $5,000, which equals $45,000 and then less the Medicare refund at $1,000, which comes to $44,000. This is then divided by 2 (or halved) to give you the 50/50 Rule amount = $22,000, OR

• $50,000 – ($5,000 + $1000) = $44,000 ÷2 = $22,000.

Therefore, even if your legal fees came to say $50,000 for all of the work we did for your case to obtain compensation for you, we would have to reduce our fees considerably so that you were guaranteed to receive $22,000 in your hand from your settlement sum.

So $22,000 would be the 50/50 Rule amount in relation to that settlement and we would not be able to charge you any more than this for our professional fees at law, even if we have done a massive amount of work on the matter and our fees are higher than this – we cannot charge you any more than this amount.

We have to reduce our fees to be no more than this amount. Also, this amount includes GST and any service charges in it – we cannot add these on top of it.

Now if it is the case that our fees for successfully running your case are actually less than $22,000, then we cannot charge you under the 50/50 Rule because we have not incurred those fees on your case -we have not done that much work.

We can only charge you for the work we actually do on your case to achieve a successful result.

So, say our fees came to $10,000 at the end of your case, then we could not charge you the $22,000 under the 50/50 Rule – we could only charge you the $10,000 in fees we have incurred (plus GST and service charges) and you would receive an increased amount in your hand from your settlement sum, accordingly.