Numerous complaints regarding law firms billing practices have started raise a few eyebrows in the legal sector especially of those at the Legal Services Commission. Even with the implementation of the 50/50 rule in personal injury cases back in 2007 which replaced the Queensland Law Society Act 1952 the commission still has their concerns.
What is the 50/50 rule?
In Queensland, personal injury lawyers are bound by the Legal Profession Act 2007. The act sets out a solicitors obligations putting a cap on the fees they are allowed to charge in speculative personal injury cases.
The rule was first introduced when the Queensland Law Society Act 1952 (the QLS Act) was amended to include new sections regarding the 50/50 rule. The rule is designed to stop law firms recovering legal costs that exceed 50% of a plaintiffs compensation award. Although it sounds pretty straight forward, the formula can be a little tricky.
How does it work?
The maximum amount of no win no fee legal costs (inclusive of GST) is to be worked out using the formula [E– (R+D)] × 0.5
- E represents the amount of compensation a plaintiff is entitled to under a judgment or settlement, including an amount they are entitled to receive for costs under the judgment or settlement.
- R represents the total amount the plaintiff must reimburse when they receive their compensation.
- D represents the total amount of disbursements or expenses the plaintiff is liable for.
Examples for Disbursements
- Disbursements or expenses such as medical examinations, court filing fees and other third-party costs may be paid by the plaintiff directly, through a law practice or by a litigation funder.
- If a client obtained a litigation loan to fund any disbursements and expenses on their solicitor’s recommendation and pays them directly to the provider, such expenses fall within D.
What personal injury matters does the 50/50 rule apply to?
The rule can be applied to a number of matters in Queensland including:
- TPD (Total and Permanent Disability)
- Road accidents
- medical negligence
- workers compensation
- public liability
- CTP claims
- stress claims
- common law claims
- and many more
The 50/50 rule is offered at a lawyers discretion, however, if they run your cases and they are a Queensland law firm, they must abide by the rule.
What happens if a plaintiff changes law firms?
If a plaintiff wishes to change law firms halfway through a personal injury claim there will more than likely be a dispute as to how much fees each firm can recover. From a plaintiffs perspective, the 50/50 rule will still protect them from paying out more than half of their settlement in costs so the firms in question will have to come to some commercial agreement.
If they have both carried out a similar amount of work they may choose to split the receivables straight down the middle. However, if the work carries out by one form far outweighs the other the receivables will be divided proportionately between them, depending based on their individual billables.