The purpose of this blog article is to explain what the Upper Offer Limit is and why it is so important to clients in terms of their ultimate ‘in hand’ outcome and what can be done to achieve the best possible results.
What is the Upper Offer Limit?
If you have been injured in a road accident, the amount of any settlement or favorable judgment award has a direct bearing or impact on the amount of legal costs the insurer is required to pay.
At the present time, there are three Compulsory Third Party Insurers in Queensland – AAI Ltd trading as Suncorp Insurance, Allianz Australia Insurance Limited and QBE Insurance.
From 1 July 2024, the Upper Offer Limit increased from $87,300.00 to $91,460.00.
Ok, but what does this really mean and how can this impact the ultimate ‘in hand’ outcome for clients?
From a practical perspective, unless a client can achieve a settlement sum or judgment award of anything more than $91,460.00 all that they can recover in terms of a contribution towards their legal costs is $4,590.00 but only if they can achieve a settlement or judgment award of at least $54,850.00.
For any settlement or judgment below $54,850.00, an injured person receives nothing or zero contribution towards their legal costs.
If we turn the clock back to 2002 to 30 June 2010, the Upper Offer Limit was much more achievable $50,000.00
Practical Examples
If your accident occurred after 1 July 2024 and the settlement or judgment award is say $100,000.00 you will achieve what is called standard costs.
At vbr Lawyers, an outcome where clients achieve a contribution towards their legal costs on the standard basis this is consistent with an Upper Costs Limit outcome and this means that the insurer will make a contribution toward the total legal costs of at least 50% but more likely 50% to 70%.
Some and actually many of our competitors have much higher fee structures and hourly rates and staff on high hourly rates who typically advise their clients the likely contribution will be not more than 50% or even as low as 30% to 50%. At vbr Lawyers, our clients do much better than that in terms of their ‘in hand’ outcomes because our fee structure is so much more client friendly.
| Settlement Sum | $100,000.00 |
| Plus standard costs | $25,000.00 |
| Less total costs | $40,000.00 |
| Result clear of legal costs | $85,000.00 |
The only other items that can or will impact on the ‘in hand’ figure will be any refunds which might be owing to say Medicare, Centrelink, WorkCover Queensland or a private health insurer.
If it was not possible to achieve a settlement consistent with the Upper Costs Limit and the settlement is say $60,000.00
| Settlement Sum | $60,000.00/td> |
| Add regulation costs: | $4,590.00 |
As you can see, the difference with the costs recover is incredibly significant. This is where the vbr Lawyers client friendly terms and conditions are helpful and important to our clients. Even if we have applied every effort possible to achieve a result consistent with the Upper Costs Limit but it has not be possible to achieve it, our 30% fee cap may assist as follows:-
If we assume that the outlays and refunds are not more than $10,000.00, the maximum professional costs we can charge is $16,377.00 and our client’s ‘in hand’ would be $38,213.00. However if the total professional costs are only say $12,000.00 then our client’s ‘in hand’ would be $42,213.00.
Key Takeaways
- The Upper Costs Limit is especially important in CTP claims. Retaining a lawyer who is able to reasonably and appropriately maximize the value of the claim to exceed the Upper Costs Limit can have a huge impact on the ultimate ‘in hand’ figure for their clients
- If it is unlikely that the Upper Costs Limit will be achieved, having a lawyers who can still maximize the value of the claim but keep the legal costs low is extremely important. Which lawyer or law firm you pick and the firm’s fee structure will directly impact your ‘in hand’ figure
