What is an ‘uplift fee’?
If you have a ‘no win-no fee’ costs agreement, you should be mindful that your lawyers may charge an uplift fee on top of any fees that are otherwise payable should your case wins. This is because the law firm covers the costs of the running your case and takes the risk that the case might be unsuccessful in which situation they may not be paid for their services.
An ‘uplift fee’ may be stated in dollar terms but is usually calculated as a percentage of the professional fees (excluding outlays) otherwise payable. Note that in either case, the ‘uplift fee’ cannot be more than 25% of the fees otherwise payable. It is your lawyer’s obligation to tell you in writing what the rate of the ‘uplift fee’ is (if any), and in which situations you will be counted as winning the case. Generally speaking, winning the case means: –
- A reasonable offer of settlement is made; or
- Resolution by settlement agreement where compensation or damages or costs are payable to you; or
- A judgement of a count or tribunal is in your favour; or
- If you obtain compensation or obtain a benefit from a statutory or other compensation scheme or by way of an ex-gratia payment.
The ‘50/50’ rule
Lawyers are typically charged on an hourly basis. A file is charged according to how much work your solicitor has done on your matter. According to s 347 of the Legal Profession Act 2007, the maximum a law firm in Queensland can charge is 50% of the settlement amount after statutory refunds (e.g., Medicare or Centrelink) and outlays. Imaging that you receive a settlement amount of $50,000 including costs. You owe Medicare a refund of $500, you owe Centrelink a refund of $1,500, your outlays (for medical reports, physiotherapy records etc) is $3,000 and the professional fees are $40,000. The 50/50 rule will be applied in the following way:-
Example 1: Settlement amount (including costs recovered from the other party) is: $50,000
$50,000
Less $500 refund to Medicare
Less $1,500 refund to Centrelink
Less $3,000 outlays
Net amount $45,000
$45,000 divided by 2 (50/50 rule)
Total = $22,500 to lawyer (this is the cap on the lawyer’s fees)
Total = $22,500 to you (the remaining amount paid to the client once the lawyer’s fees have been paid)
Example 2: Settlement amount is :$100,000
Less $500 refund to Medicare
Less $1,500 refund to Centrelink
Less $3,000 outlays
Net amount $95,000
Total = $40,000 to lawyer (this is the amount of work that has been done by your lawyer, and because the amount does not reach 50% of the net amount, therefore the 50/50 rule did not apply)
Total = $55,000 to you
In next article, we will talk about how we calculate your settlement amount, in another words, what you can claim under the CTP claim process.
