I recently had the task of advising a client on another firm’s costs agreement in a speculative no win no fee injury claim.

The usual provisions applied – hourly rate charging, plus an uplift of 25% should the claim be successful, with payment only to be made on the success of the claim.

What struck me as unusual here though, was that in between the hourly rate, and the usual 25% uplift, was a further allowance of up to 25% would be made for care and consideration at the law firm’s sole discretion.

So, we have an uplift on an uplift!

What difference does it make to the final charge?

Take her lawyer’s hourly rate of $500 per hour GST inclusive.

If it was just the standard uplift, this rate would become $625.

With the 2 uplifts, it becomes $781.25 per hour, a $156.25 difference (or some 31.25% of the original rate quoted).  So the headline rate for the lawyer at $500 per hour, with the help of 2 uplifts, becomes $781.25 at the end.

2 things to say from the outset.

  1. A client has the choice to say no thanks.
  2. In any event the law firm’s fees are subject to a maximum statutory cap of 50% of settlement after refunds and expenses.

The concern that needs to be addressed is are these fees excessive to the point of gross over-charging?  I feel there is a real risk of such a case being made out where the law firm charges for paralegals and administration staff on high hourly rates and would not miss recording all time taken in the matter.

Further, the claim itself was very strong on liability given the nature of the claim.  The only complexity lay in proving future damages, something a law firm specialising in injury claims could not argue is novel or too taxing.

The only danger lay with an uninsured defendant – which was known from day 1 and hence the standard 25% uplift would well cater for this risk.

I can accept that there is fantastic work being done by injury lawyers which generates outcomes beyond expectations.  I contend though that at $625 per hour that sort of work is sufficient reward already and should not be further enhanced with another 25% uplift.

Peter Matus | Special Counsel, Compensation Claims