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Understanding your legal costs

Understanding your legal costs

Published on July 8, 2024 by Hanaan IndariHanaan Indari

Many people find legal costs and the way they are calculated complicated and complex. In this article, we aim to increase your understanding of legal costs so that you have a clear picture of what legal costs are and what legal costs you will likely pay if you make a personal injury claim in New South Wales (NSW). If you have any questions about the costs of your matter at any time, you should raise these with your lawyer.

What This Article Does Not Cover

It is important to note that this article does not cover the legal costs payable for providing  advice and pursuing a dispute in the Personal Injury Commission related to no-fault benefits claimed to be payable for persons injured in motor accidents (after 1 December 2017) and in work accidents.  We will never charge you legal costs for acting in these claims for no-fault benefits given these legal costs are typically payable by the insurer of the other side or, in the case of most workers compensation claims, by the Independent Review Office (IRO).

Before work is started

Before work is started on your matter, the following things will be explained to you in detail:

i. how your lawyers’ legal fees are calculated;

ii. the likely costs involved to prepare and run your matter;

iii. any additional costs that you may incur;

iv. any costs that may be recoverable from the other party;

v. any costs that may be recoverable by the other party from you.

What are legal fees and how are they calculated?

Legal fees represent the charges for the legal services provided by a lawyer or your legal firm. These fees can vary depending on factors such as the complexity of your matter, the experience and expertise of the lawyer and the amount of time spent on your case.

There are many ways to calculate legal fees.

i. Hourly rates – lawyers often charge legal professional fees based on an hourly rate. The hourly rate reflects the lawyer’s time spent working on the case. The total professional fees are calculated by multiplying the hourly rate by the number of hours spent working on the matter.

ii. Fixed fees – in some cases, lawyers may offer fixed fees for specific legal services or tasks. This provides clients with cost certainty and eliminates the uncertainty associated with hourly billing. Fixed fees are agreed upon upfront and remain constant regardless of the time spent by the lawyer completing the task.

iii. Contingency fees – in Australia, fees are never calculated as a set percentage of the compensation you receive if your case is successful (otherwise known as contingency fees). This is common in the United States of America but in Australia this type of fee agreement is not permitted. Your legal professional fees should be disclosed upfront and agreed to when you decide to choose your lawyer to represent you in your matter.

What are the extra expenses?

It is likely that you will incur expenses for services that are provided by other parties, and these expenses are called disbursements.

There are many examples of disbursements, including for example, a barrister’s fees, the cost of obtaining clinical records from hospitals and reports from medical experts or other external consultants, as well as court fees.

In a personal injury litigation case, disbursements are usually recoverable, in total or in part, from the other party if your case is successful. All reasonably incurred disbursements that cannot be recovered from the other party will form part of the legal costs that are payable by you.

You may be required to contribute towards the disbursements incurred or to be incurred on your behalf. There are options available to you if you are unable to fund any disbursements and your lawyer will discuss these with you depending on your financial circumstances and the circumstances of your case.

Are there costs if we go to court?

Your lawyer will provide you with clear and complete information about your likely legal costs before you commit to taking any court action. Your lawyer will explain, discuss and negotiate legal costs with you before starting any work on your claim.

It is important however to understand that it can be difficult to predict whether a case will settle early or proceed to a court hearing. Some court hearings can be short and others lengthy. If your lawyer cannot predict the likely direction your case will take, you will be provided with information about the potential costs at each stage of your case. The overwhelming majority of cases do settle before going to court.

If my court case is unsuccessful, will I have to pay the costs of the other party?

There are always potential risks associated with commencing a court action. Most courts and tribunals are authorised to instruct you to pay the other party’s costs (that is, the defendant’s costs) if your case is unsuccessful.

While there is a real risk, it’s important to remember that being ordered to pay the other party’s costs only happens in a small percentage of cases. This risk arises in most litigation.  This risk does not ordinarily apply to proceedings at the Personal Injury Commission (PIC) which deals with work injury damages mediations and motor accidents damages assessments unless the proceedings continue beyond the PIC process.

Your lawyer will continually monitor and assess your case to ensure that you’re not exposed to an unreasonable risk of having to pay the other party’s costs.

‘No Win – No Fee’ to us

Depending on the outcome of your case, you may not need to pay any legal fees at all.

The offering of legal services on a no win, no fee basis means you don’t face the burden of upfront costs to protect your rights and secure the compensation that you’re entitled to. You are only required to pay for your legal costs if you get a successful outcome when we act for you until the end of your matter.

A ‘No Win – No Fee’ agreement lets you pay for your legal costs out of the proceeds of your settlement, the damages awarded by the court, or other agreed compensation. You may also be able to recover some, but not all, of your legal costs from the opposing party if you get a successful outcome.

It is however important to understand that even though you don’t have to pay your own legal costs unless you get a successful outcome, you could end up having to pay the opposing party’s legal costs. This does not usually happen in proceedings filed in the PIC.

As with any legal agreement, it is crucial for you to thoroughly understand the terms and conditions before entering into a “No Win No Fee” arrangement, ensuring a fair and transparent legal process. Please note that this article does not constitute legal advice. If you are seeking professional advice on any legal matters, you can contact Carroll & O’Dea Lawyers on 1800 059 278 or via our Contact Page and one of our lawyers will be able to assist you.

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