In this blog, I will be discussing legal costs with respect to WorkCover Claims. I will explain when and how injured workers are entitled to recover some or all of their legal costs from WorkCover.
When can an injured worker recover some or all of their legal costs from WorkCover?
If an injured worker has received a Notice of Assessment from WorkCover and has then decided to pursue a common law claim for damages, an injured worker is not entitled to recover any legal costs from WorkCover unless the injured worker has received a Notice of Assessment with a work-related impairment (WRI) of 20% or more.
A WRI of 20% or more is referred to as a certificate injury.
Most injured workers do not receive a certificate injury.
If an injured worker does receive a certificate injury, they have the benefit of being able to accept the lump sum offer which is contained in the Notice of Assessment and also sue for common law damages.
If the WRI is less than 20%, the injured person cannot accept the lump sum offer and sue for common law damages. This is referred to as the irrevocable election.
As the majority of injured workers do not receive a certificate injury, the majority of injured workers will not be entitled to recover any of their legal costs from WorkCover.
To sue or not to sue for common law damages?
If an injured worker does not have a certificate injury, the decision about whether to sue or not to sue is a rather important question.
If an injured worker has a WRI of say 10%, the offer of lump sum compensation from WorkCover will be about $40,000.00. If a common law claim is pursued and the damages recovered is say $400,000.00 then pursuing the common law claim has proven to be a good idea. From the damages outcome of say $400,000.00 there are some deductions which will apply for statutory refunds such as Medicare Australia, Centrelink and legal costs. If the statutory refunds and legal costs amount to say $50,000.00 then pursuing the common law claim has been a worthwhile experience as compared with accepting the lump sum offer.
Making the decision to reject the lump sum offer of say $40,000.00 and pursue the common law claim is more challenging and complex if the value of the claim is say $100,000.00 and if there is some risk regarding winning the case or proving that the employer was negligent. Once the lump sum offer has been rejected and the common law claim is being pursued, WorkCover is under no obligation to go back and offer the $40,000.00 lump sum offer if things are looking good in the common law claim. This is why obtaining quality legal advice is rather important. The decision that is made to pursue or not pursue the common law claim might also depend on how much risk the injured person and their lawyer is prepared to accept.
When can injured worker recover legal costs from WorkCover?
If an injured worker has a certificate injury, they can recover a relatively small amount towards their legal costs after the common law claim has commenced up to the compulsory conference which is often about $8,000.00 or thereabouts in the writer’s experience.
After the compulsory conference and if court proceedings are commenced, additional or more legal costs are able to be recovered, however, there will still be a gap and in some cases a large gap between the costs that can be recovered from WorkCover and the total legal costs. This is why the choice of lawyer or law firm, and the fee model or fee structure is an important consideration before an injured worker makes the decision about which law firm to retain to act for them.
If the injured worker who has a certificate injury offers to settle their claim for say $400,000.00 at the compulsory conference and the matter proceeds to trial with the injured person winning the case and the judgment is say $450,000.00 then the injured worker is likely to obtain an order from the court that WorkCover pay a much higher portion or percentage of the legal costs. While highly desirable, this outcome involves proceeding to trial which involved engaging all of the additional costs and risks associated with conducting a trial as compared to the attractive certainty of a settlement and conserving legal costs.
If an injured worker who does not have a certificate injury, makes an offer to settle at the compulsory conference of say $150,000.00 and wins the trial and achieves a judgment award of say $200,000.00 then the injured worker is likely to obtain an order for costs in their favour which might allow them to recover up to say 50% of their legal costs from when the offer was first made until the end of the trial.
For injured workers who do not have a certificate injury, it is rather important to try to resolve the case as early as possible as this will help keep the costs down and allow the injured worker to receive the highest ‘in hand’ outcome possible.
If an injured worker without a certificate injury makes an offer to settle at the compulsory conference at say $150,000.00 and WorkCover’s offer to settle is $100,000.00 and the judge awards $125,000.00 the problem for the injured workers is they would have been financially better off or much better off taking WorkCover’s offer of $100,000.00 due to the costs incurred with conducting the trial in the hope of achieving a better outcome. While no personal injury lawyers have a crystal ball, this is why it is so important to make calm and sensible decisions when making offers to settle at the compulsory conference in terms of the big picture of trying to achieve the best result possible while keeping the costs down.
