The 50/50 Rule - Estimating Your Legal Costs For Injury Claims
From the Legal Profession Act 2007
Section 347 Maximum payment for conduct of speculative personal injury claim
(1) The maximum amount of legal costs (inclusive of GST) that a law practice may charge and recover from a client for work done in relation to a speculative personal injury claim must be worked out under the costs agreement with the client for the claim or this Act but in no case can those legal costs be more than the amount worked out using the formula:
E – (R + D) X 0.5
- E means the amount to which the client is entitled under a judgement or settlement, including an amount the client is entitled to receive for costs under the judgement or settlement.
- R means the total amount the client must, under an Act, a law of the Commonwealth or another jurisdiction, or otherwise, refund on receipt of the amount to which the client is entitled under the judgement or settlement.
- D means the total amount of disbursements or expenses for which the client is liable if that liability is incurred by or on behalf of the client either by the law practice or on the advice or recommendation of the law practice, in obtaining goods or services (other than legal services from that law practice) for the purpose of investigating or progressing the client’s claim, regardless of how or by whom those disbursements or expenses are paid, but does not include interest on the disbursements or expenses.
Examples for D
1 The disbursements or expenses may be paid by the client direct or through a law practice or by a person funding the client for those disbursements or expenses.
2 If a client obtains a loan to fund the payment of disbursements and expenses on the firm’s recommendation and pays for medical and expert reports direct to the provider, the expenses fall within D (but the interest payable by the client on those expenses do not).
(a) the amount of legal costs that a law practice may charge and recover from a client is more than the amount calculated under subsection (1); and
(b) the law practice wishes to charge and recover the amount (the greater amount) from the client; the law practice may apply under subsection (3) for approval to charge and recover the greater amount.
(3) The application must be made in writing to-
(a) if the law practice is a barrister—the bar association; or
(b) otherwise—the law society.
(4) A relevant regulatory authority may, in writing, approve an application made to it for an amount up to the greater amount.
(5) This section applies to a barrister only if the barrister has not been retained by another law practice.
(6) This section applies despite section 319 and division 5.
(7) Also, this section applies to any request for payment made on or after the day this section commences, whether or not a client agreement was entered into before that date.
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