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PI practitioners: Is it time to review your cost agreement?

Queensland Law Society Senior Policy Solicitor Hayley Stubbings provided a most useful round-up of the changes arising from the passage of the Personal Injuries Proceedings and Other Legislation Amendment Act 2022, including the changes to the Legal Profession Act Qld 2007 (LPA).

The changes concerning the 50/50 rule commenced on 30 June 2022 and are now in effect.

Does this impact your personal injury files?

If you entered into a cost agreement with your client for a speculative personal injury matter before 30 June 2022 and that matter had not settled, been decided by the court or otherwise concluded by 30 June 2022, then section 347 of the LPA will apply.

The maximum amount of claim-related costs (inclusive of GST) that a law practice may charge and recover is limited by the 50/50 rule.

The legislation clarifies what payments are to be characterised as disbursements. Notably, you cannot include, as a disbursement, a fee paid to another entity for obtaining instructions or preparing statements in relation to the claim. This excludes amounts payable to a barrister engaged by the law practice after notice of the claim is given, under the respective legislation for the particular claim type, or before such notice if an urgent proceeding is commenced.1

What does this mean?

If your practice engages a consultant (or other entity) to draft statements or take instructions, the consultant’s fees are not disbursements.

If you entered into a cost agreement with your client on the basis that these additional amounts would be disbursements (so paid by the client in addition to your legal fees), you may need to revise your cost agreement and cost disclosure notice to comply with the amendment to the Act.

The 50/50 rule (as amended) will include the law firm’s legal fees AND any additional amounts in the cap.

Would you like to discuss your cost disclosure notice and billing practices in a confidential consultation with another practitioner? The Practice Advisory Service (PAS) is a complimentary service to members offered by QLS Solicitor Support Pty Ltd (a wholly owned incorporated legal practice of QLS).

Our solicitors have years of experience running their own practices and are able to provide guidance in essential areas such as appropriate management systems for incorporated legal practices, legal project management, records management, costs disclosure, client agreements, and practice management generally. Find out more about the Practice Advisory Service.

If you would like to register your interest for a Practice Advisory Service visit, message ethics@qls.com.au.

Footnote
1 s347(8)(b) LPA.

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