The 50/50 Rule
In Queensland, if you are making a claim under a ‘no win-no fee’ arrangement with your lawyer for compensation as a result of suffering personal injury in an accident, the law restricts the amount that your law firm can charge you. – known as the 50/50 rule.
The 50/50 rule is set out in ss.345-347 of the Legal Profession Act 2007 (LP Act) and basically provides that the maximum amount a law firm can charge (including GST) is one half (or 50%) of the amount received after an agreed settlement or a judgment ordered by the Court. This includes any costs recovered from the other party – after refunds (e.g. to Medicare or Centrelink) and legal expenses (also known as ‘disbursements’ or ‘outlays’) have been deducted.
The formula law firms use is as follows:
Maximum fees = [settlement amount – (refunds + disbursements) ÷ 2]
How does the ‘50/50’ rule work if I change law firms?
If you change law firms and the ‘50/50’ rule applies to your case (which it will if you have a personal injury claim), there may be a dispute as to what amount of fees each firm is entitled to. It is the view of the Legal Services Commission that the rule is designed to ensure that a client receives a fair proportion of any settlement or judgment, and as such, the rule should cap the total costs payable by the client to both (or all) law firms which acted in the matter to a maximum of 50% of the settlement. How that cap is divided between those firms can be negotiated commercially between them. In most cases, this would involve the amount being divided proportionately between them, depending on the amount of work done by each firm
Source: Trilby Misso website Legal Services Commission No Win – No Fee Agreements Version 2, 6 December 2012
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