How are legal costs paid in motor vehicle claims?

Most lawyers will act on your behalf on the basis of a No Win No Fee Agreement also called a Conditional Costs agreement.

This means that the lawyer will only be paid legal costs if you are successful in obtaining compensation. If you are not successful the lawyer will not charge you any legal costs. They may still charge disbursements for the cost of medical reports.

If you are successful in your claim then a large part of the legal costs are payable by the CTP insurer in accordance with the Motor Accidents Compensation Regulation NSW 2005.

The CTP insurer pays legal costs based on how far the claim progresses and how much compensation is agreed or awarded to you. This amount is usually 50 -70% of the total legal costs payable by you to your lawyer.

Your lawyer is not allowed by the Legal Profession Act to charge an amount or percentage based on what you receive in compensation; this is called Contingence fees and is banned in NSW.

The legal costs and disbursements are payable to your lawyer at the conclusion of your claim.

The amount of legal costs and disbursements payable will be determined by the Conditional Costs Agreement you have signed with your lawyer and is payable from the compensation you receive. You should always make sure you clearly understand how you lawyer will charge legal costs before you sign the agreement.

If you are unsuccessful in a claim you may be ordered to pay the CTP insurer legal costs. The likelihood of this occurring is very low and only applies to claims which have been declined and need to go to Court. Any such risk will be discussed with you by your lawyer before proceeding.