What’s the catch with no win no fee in WorkCover matters?
When you engage a lawyer to assist you with a WorkCover matter in Victoria, in most instances that lawyer will represent you on a no win no fee basis.
Sometimes they won’t, but you’ll find in most instances they will.
And this is not just the big lawyers that you see advertising every day on TV. This is most lawyers, even the small firms.
Many people however don’t fully understand how no win no fee actually works and what the catch is (if there is one at all) in relation to no win no fee representation.
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How no win no fee agreements work
No win no fee means in most cases that you will not need to pay money upfront to a lawyer to have them represent you in relation to your WorkCover matter.
And most people assume it also means that they will not have to pay money to the lawyer unless they win their case.
This can be accurate, but isn’t always as will be explained further on down the page.
Two components to legal costs
There are two components to legal costs, generally speaking, when it comes to no win no fee agreements.
The first is called professional costs
Professional costs are costs that are payable to your lawyer for work done in relation to your matter.
To use an analogy, if you take your car to a mechanic, professional fees in a WorkCover matter would be the same as paying the mechanic for their labour.
And usually, the longer that your matter has gone on for and the more work that has been done, the larger the professional costs bill will be.
You’ll find that your bill for professional costs will usually be significantly more in relation to a common law claim than an impairment lump sum claim.
The second component to legal costs disbursements
Disbursements are costs that the law firm will pay out to other parties on your behalf to pursue your matter.
To continue the analogy above, if you took your car to a mechanic, disbursements would be the equivalent of paying the mechanic for parts.
So typical disbursements that might be incurred in a WorkCover claim are:
- Barristers fees
- Medical report fees from treating doctors
- Clinical notes from treating doctors in hospital.
- Medical assessments (to doctors arranged by your lawyer)
If you are successful in your WorkCover matter
Lets say that you pursue a common law lump sum claim with a lawyer on a no win no fee basis.
If you were to succeed in that claim, then the other side will be responsible for paying some costs to you.
You’re then left to pay the gap amount of costs to your lawyers.
This gap amount will be made up of the professional costs and disbursements that have not been covered by the other side.
As an aside, it’s worthwhile noting that in WorkCover matters, although some clients believe that if you’re successful you can get all of your legal costs paid by the other side. This is rarely how things work however.
So what exactly is the catch with no win no fee?
The main catch isn’t really a catch, it’s mainly just a lack of understanding as to how no win no fee agreements differ between firms.
Not all no win no fee agreements are the same.
And just because you have a no win no fee agreement with a big firm, doesn’t mean it will be better than the no win no fee agreement of a smaller firm.
Here’s an important thing that you need to be aware of.
Some no win no fee agreements will require a person to pay for disbursements even if they do not win their case.
So earlier on, we explained that legal costs are generally made up of professional fees and disbursements.
Some firms, if you not successful in your WorkCover matter will waive the professional costs, that is costs for work done, but will still require you to pay some or all of the disbursements.
The agreement will still be a no win no fee agreement, but only in relation to professional costs and not disbursements.
So if you have a no win no fee agreement currently, or are going to enter into a no win no fee agreement with a law firm, you should clarify whether disbursements will need to be paid by you in the event you are not successful in your matter.
And don’t think that just because you are seeing or thinking of seeing a big law firm that this means you are more likely to not have to cover the disbursement costs.
Some of the big firms have in their no win no fee agreements that if a person loses their WorkCover matter they will be required to be pay disbursement costs.
This is important to clarify because disbursements can total several thousand dollars and if you’re pursuing a common law claim, it can be tens of thousands of dollars.
Another thing you should be aware of in relation to no win no fee agreements is what’s called an uplift fee.
Because a law firm does act on a no win no fee basis, they are allowed to bill you up to 25% extra on top of their legal fees.
This is because they carry the risk of losing a no-win no fee matter and the costs associated with the claim.
So because of this if they wish they can bill you up to 25% extra of their costs.
They don’t have to do this, but they can.
Or they could for example only bill you 10% extra or anywhere from nothing to 25%.
It is important to point out that if for example you obtain a settlement of $400,000 by way of a common law claim, it is not up to 25% of that amount extra.
It is up to 25% of the lawyers fee. So if the lawyers fee before adding an uplift fee is $20,000, they are able to add up to 25% of $20,000 to the $20,000.
Also, some law firms, rather than paying for disbursements themselves, will take out a loan.
And that means that a third party will be paying for the cost of disbursements and you will be required to pay for the cost of that loan in the form of interest and other fees, usually only if your matter is successful.
If the law firm is using a third party to pay for the cost of the disbursements, then you should be notified of this in the form of a contract to review and sign you should insure to read it carefully before signing.
Both big and small law firms will do this, but not all firms do this.
Some lawyers will simply just pay for the cost of the disbursements themselves without you having to attract interest and other costs on top of that which should save you money once your matter has resolved.
Finally, some firms will use a third party service to obtain medical material in relation to your matter.
So they will pay this third party service to say obtain medical reports from your treating doctors, health practitioners and hospitals that may have treated you.
There are fees associated with this and they can be quite expensive.
Again, not all lawyers will use these third party services. Other firms will simply just obtain the medical material themselves so again, you won’t need to incur any extra costs.
But if the firm is using one of these third party providers you will need to pay any of the associated fees usually at the end of your matter if it resolves successfully.
No win no fee agreement give people the opportunity to pursue WorkCover matters with the assistance of a lawyer in instances where they may not have been able to afford to do so had they been required to pay money upfront.
When entering into a no-win no fee agreement with a law firm, a person needs to understand the difference between professional fees and disbursements.
Keep in mind that not all no win no fee agreements are the same. Some no-win no fee agreements, even those from some of the big law firms, will require a person to pay some all of the disbursement costs even if they are not successful in their matter.
So a no win no fee agreement in this instance would actually only relate to the professional costs and not the disbursements, but it could still be referred to as a no win no fee agreement.
And this is important because if you are pursuing a common law matter, the disbursement costs can be many thousands of dollars or tens of thousands of dollars.
You should also be aware when of the uplift fee, and also that some law firms will take out a loan on your behalf to pay for the cost of disbursements and you will need to pay interest and any fees associated with that loan.
Finally, some firms will use a third party service to request medical material in relation to your matter and any fees in relation to these will also need to be paid, again usually upon successful resolution of your matter.