The latest industry insights into compensation law.

Legal Costs in Personal Injury Claims Explained – Part One

In this blog, I will be discussing legal costs in personal injury claims with respect to how they are generally calculated, the range of outcomes that exist for consumers/clients and their rights and remedies if a client feels they have been charged too much.

Do I need to engage a lawyer in the first place?

An injured person can pursue their compensation or damages claim without a lawyer which has the advantage of no legal costs being incurred.  

Some injured people do this each year.  In motor vehicle accident claims, the Motor Accident Insurance Commission regularly publishes data each which indicates that hundreds of injured people lodge claims directly with CTP insurers.  For example, in the last quarter of 2022, 412 injured people from motor vehicle accidents lodged claims directly with CTP insurers while 1,428 injured claimants retained a law firm to lodge the claim which is about 29%.  However, in CTP claims, an injured person might lodge the claim directly at the start of the claim and then engage a lawyer as the claims progresses when the injured person is trying to determine what is a reasonable or fair value for their claim which the writer frequently sees.  Still, 29% is quite a significant percentage.  

The clear or major advantage of being self-represented in any personal injury claim is not having to pay any legal costs and perhaps whatever satisfaction may be achieved by handling the matter yourself without having to rely on anyone else for advice or guidance. 

Other historical figures from the MAIC has revealed that the average outcome in CTP claims for self-represented claimants is at or about $9,000 while the average for injured people with legal representation is in the order of $80,000 to $90,000 which is a very big difference.

Disadvantages of being a self-represented claimant

While not having to pay any legal costs is a major advantage from being self-represented, there are some major downsides to being self-represented including:-

  • When dealing with an insurer directly, they will be knowledgeable and experienced regarding the claims process, how to assess the compensation or damages and they can use this experience to their advantage and your disadvantage;
  • The insurer has no obligation to provide legal advice or guidance regarding the claims process or to indicate how much your claim is really worth;
  • By being self-represented, every time you speak with the claims officer/s on the telephone or via email, and by agreeing to answer their questions, you are giving them an excellent opportunity to seek information or informally cross-examine you about matters that that they never would if you were legally represented;
  • In the writer’s experience, the self-represented person has a strong tendency to significantly undervalue or overvalue their claim for the perfectly understandable reason that they do not know the law when it is always the application of legal principles that determine the quantum or full value of a claim;
  • There is no buffer or barrier between the insurer and the self-represented person.  A lawyer who is experienced in personal injury law can ensure that the insurer is behaving reasonable or appropriate and will call them out when appropriate.  This is very difficult for an injured person to do when self-represented as they generally approach the case on the basis that they are hoping that the insurer will ‘do the right thing’ and offer them something reasonable.   While perfectly understandable, compensation or damages claims of all types involved the interests of the injured as compared with the insurance companies whose interests are opposed to the injured person.  We have an adversarial system in Australia and while not perfect it simply means that insurers will try to pay an injured as little as possible, every time. 
  • If the claim ends up being viable to run, the injured person may end up receiving a contribution towards their legal costs from the insurer which can be quite valuable

In very minor CTP or motor vehicle matters, an injured person may achieve a similar or the same result ‘in hand’ if they self-represent as compared with engaging a lawyer.

Protections from being overcharged

For minor or very minor claims when injured people have engaged a lawyer, there are laws which limit how much lawyers or law firm can charge in personal injury claims.  This is a form of consumer protection that exits which is set out in the Legal Profession Act 2007.  

In plain English, the law prohibits law firms from charging more than 50% of the net proceeds of the claim after the deduction of any statutory refunds (such as Centrelink or Medicare or WorkCover refunds) and outlays (such as medical report fees) which is commonly referred to as the 50/50 rule.

Some but certainly not all law firms offer their clients a better or more attractive outcome than the 50/50 rule so it pays do some research on this.

Most if not all plaintiff personal injury law firms offer a free initial case assessment so if you are unsure whether your claim is viable or is ‘big enough’ to justify having proper legal representation, it’s a good idea to seek some initial legal advice provided at no obligation from a firm with a good reputation and plenty of experience.  

If the law firm has a good reputation and plenty of experience, they will not want to be retained in a case that is not going to be financially worthwhile for their client and the firm to run but if doubt, best to check.

If an injured person has engaged a lawyer to act for them and if they feel that that they have been overcharged there are options and remedies available which include:-

  • The most simple and cost-effective approach is to firstly discuss your concerns with your solicitor/law firm and try to resolve it with them directly and without taking it any further if possible.  This is desirable first step as all lawyers and law firms do not want any of their clients being unhappy or dissatisfied with their legal bill.  Many clients have reasonable expectations.  Some do not.  Some law firms charge very modest fees.  Others do not.  There is a wide spectrum of expectations and approaches by clients and their lawyers. 
  • If the first approach does not work out or is not desirable for whatever reason, you can ask your solicitor to provide you with an itemised bill if one has not already been prepared.  You are entitled to receive an itemised bill at no cost to you;
  • Once you have received the itemised bill from your lawyer, you can then review it carefully and then consider what you think is a fair and reasonable amount and make an offer or you might seek some legal advice about your rights and options.
  • If the matter is unable to be resolved after receiving an itemised bill, you can apply to the court for an assessment of the costs and then the court will appoint an assessor to assess the amount which is owing;
  • If you believe that the client agreement which you signed at the start of the matter is unfair and/or unreasonable, you can apply to the court for an order to set aside the agreement, however, this involves a court application and considerable costs can be involved in this process so best to seek proper legal advice on this before giving this step any further consideration;
  • If any consumer of legal services believes they have been overcharged or grossly overcharged they also have the right or option of referring the matter to the Legal Service Commission.   In this regard, you can also seek advice from a solicitor prior to making a complaint to the LSC as the lawyer will be able to provide guidance as to whether the bill or tax invoice is likely to amount to overcharging or gross overcharging and whether a referral to the LSC is reasonable or justified in the circumstances and whether it is likely to achieve anything.
Greg is widely regarded as one of Australia’s leading compensation law experts. Greg has a very healthy practice and enjoys providing his clients with superior personal service in every case. Greg is absolutely committed to achieving the best settlement outcomes for his clients while keeping the legal costs down.

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Your state has been updated to QLD. Practice areas on compensation law have been updated.