Ethics FAQs - Personal Injury

Find the rule in ss 345-347 of the Legal Profession Act 2007 (LP Act).  It applies to matters where a ‘request for payment’ is made on or after 1 July 2007, whether or not a client agreement predates that. These provisions replaced ss 48IA-48IC of the Queensland Law Society Act 1952 which had applied from 6 November 2003.

The formula in the rule works as follows:

·        start with the amount of the settlement or judgment including any costs to be paid by the other side

·        deduct the refunds your client has to make and all disbursements

·        arrive at a balance

·        the fees, which are inclusive of GST (calculated in accordance with your client/costs agreement, or s 319 of the LP Act if no client/costs agreement), must not exceed half of that balance.

In a personal injury matter clients should not be charged any more than half the amount to which they are entitled under a judgement or settlement after any refunds and the total of disbursements the client is liable for have been deducted.

The rule in the LP Act is more wordy than the Queensland Law Society Act 1952 (QLS Act), which is intended to provide clarity and to close certain possible loopholes identified by the Legal Services Commission.

The Legal Services Commission applied to the Supreme Court for declarations as to the meaning of ‘disbursements’, whether this term included interest on litigation loan repayments, and the treatment of GST – see Legal Services Commissioner v Dempsey [2008] QCA 122.

The Legal Services Commission believes that the principles the Court of Appeal enunciated relating to the old rule in the QLS Act also apply to the new rule in the LP Act.

Following the Court of Appeal judgment the LSC issued Guidelines for charging fees in speculative personal injury matters.  An article about the judgment and the guidelines was published in Proctor in July 2008 50-50 Rule: Court of Appeal upholds decision.

All relevant files are to be reviewed to ensure clients are not overcharged due to a misinterpretation of the rule.  Overcharged clients are to be refunded with interest.  The LSC has said:

We say that we see no public interest in initiating disciplinary proceedings against any lawyers who misunderstood the true meaning of the rule and so overcharged their clients before the law was settled by the decision of the Court of Appeal provided of course that they reimburse their clients the amounts they overcharged them together with interest. We say that lawyers who overcharge their clients in the relevant ways now that the law is settled will not be treated so leniently. If you don’t know about these matters, you should, and you should make it your business to find out.

Further reading: LSC Annual Report 2007-08 pp 26-28.

The solicitor concerned in the 2008 Court of Appeal decision has since been prosecuted by the LSC in relation to breach of the rule under the QLS Act – Legal Services Commissioner v Dempsey [2009] LPT 20. The Legal Practice Tribunal found that the solicitor had committed unsatisfactory professional conduct by charging excessive fees, that is fees in excess of the amount permitted by the rule.

The solicitor in that case was also found guilty of professional misconduct in preferring his own interests to those of the client by purporting to have her waive the benefit of the rule.  This case makes it clear that the rule cannot be waived. Similarly a client cannot contract out of the rule by signing a client agreement containing such a term. See paras 109-112 of the judgment.

The case stresses that the only way you can charge more than the statutory formula is with the approval of the QLS Council.  Section 347 permits an application to the QLS Council for approval to charge more. The QLS has issued guidelines and details of QLS Council policy for these applications.  The most common circumstance under which an application may be successful is if your client has materially misled you, or not told the whole story, intentionally or not, and this comes out at some stage, resulting in a lower than expected outcome.

There are no longer any restrictions on touting generally. However, for personal injuries work, there are prohibitions on referrals and touting - see ss.67 to 68 of PIPA.

Also, s.32.1.2 of the Solicitors Rule 2007 is the rule against “ambulance chasing” – you cannot seek a retainer in a manner likely to oppress or harass a person who as a result of recent trauma, injury or other circumstances may be at a significant disadvantage in dealing with you at that time. Section 32 also outlines your obligations in relation to the payment or receipt of commissions, referral fees, etc (“any fee, benefit or reward”).

In personal injury advertising, under PIPA you cannot use this or any similar phrase except on your law practice's own website.

Generally, use of this or similar expressions, without qualification, is likely to be misleading or deceptive, and so would be a breach of s.36 of the Solicitors Rule 2007 unless at the time of advertising you intend to indemnify any unsuccessful client against payment of costs to any other party and the client is not required to pay disbursements.

Otherwise, you would have to take great care to ensure that there is clear disclosure in the advertisement of any sums that could be payable by the client regardless of the outcome of the case, specifically addressing the possibility of liability for disbursements or third party costs.

In the case of Legal Practitioners Complaints Committee and Browne [2006] WASAT 201 the Western Australia State Administrative Tribunal found that the words “no compensation = no legal fees” was misleading and amounted to unprofessional conduct, as a member of the public may think they have no liability for any fees or costs, rather than just those of their solicitors. The Committee in this case also complained that the advertisement did not disclose that a client may have a liability to the law practice for fees and disbursements in the event that the law practice ceased to act for the client, although the Tribunal did not make a finding in relation to that.

You should not advertise “no win no fee” for criminal law and some family law matters, as such agreements are prohibited by s.323(2) of the Legal Profession Act 2007.
 

The Legal Services Commission (LSC) has for some years been reviewing Yellow Pages for compliance with the PIPA restrictions, as well as more recently systematically reviewing law practice websites.

If the LSC believes your website does not comply, it will ask you to make amendments within three months, failing which you would risk disciplinary or civil proceedings. See the LSC Annual Report 2008-09 pp 43-46.

There have not been any proceedings taken under the Queensland legislation to date, but several cases have been brought in NSW for breaches of similar legislation. See Legal Services Commissioner v Malouf [2005] NSWADT 215 and Legal Services Commissioner v Keddie [2008] NSWADT 185.

These cases saw the solicitors involved publicly reprimanded and heavily fined – which would suggest that any breach of the Queensland provisions would be treated very seriously.

See the Personal Injuries Proceedings Act 2002 (PIPA), Chapter 3 Part 1 (sections 62 to 69).

The Legal Services Commission (LSC) is the regulatory body for PIPA, and has issued three guides:

• A guide to advertising personal injury services (June 2009)
• A guide to advertising personal injury services on the internet (June 2009)
• Advertising personal injury services - internet search engines and non-lawyer websites (February 2010). 

This most recent guide deals with 2 issues: 

1. advertising through “sponsored links” on search engine results pages on websites such as Google - essentially the content of these is restricted in the same way as print advertising
2. arrangements for referral of personal injury clients to law practices by non-lawyer referral agencies – the referrer’s website needs to comply with PIPA. 

Advertising on radio, television, cinema and recorded telephone messages is not allowed.

Advertising in print is limited to your name and that of your law practice and contact details, and details of your areas of practice or speciality, and you are not permitted any pictures. The same applies to advertising on a website other than your own.

However, on your own law practice’s website, in addition to the above, you are able to include statements about:

1. the operation of personal injury law and a person’s legal rights under that law 
2. the conditions under which you are prepared to act - this can include details of no win no fee arrangements.

There are also some restrictions on your use of pictures on your website.

The LSC's website comparer helpfully illustrates the restrictions on advertising personal injury services on your own website, and how and where pictures are permitted.

As well as the guides detailed above, the Legal Services Commissioner, John Briton, has made several speeches in which he has given further details of his views on personal injuries advertising:

• Ethical Issues in Personal Injuries Practice: Advertising Restrictions and Guidelines (February 2009)
• The Restrictions an Advertising Personal Injury Services (July 2008)
• Ethics and the Personal Injuries Lawyer: Compliance, Spiritless Compliance, Skilful and other Evasions (June 2007)

In his July 2008 speech the Commissioner sets out his office’s approach as follows:

We interpret the restrictions strictly, and deliberately so, in order to leave the least possible room for slippage and the thin ‘end of the wedge’ arguments that would inevitably accompany any broader interpretation. This seems to us to be the best and probably the only practical way to achieve some certainty and to keep a level playing field – to look after the majority of practitioners who do the right thing and who are rightly annoyed by and stand to be disadvantaged by the minority of their colleagues who push the boundaries.

There are also restrictions on touting and referrals in sections 67 to 68 of PIPA.

The LSC will not answer enquiries from solicitors about personal injuries advertising (unless there is a pending investigation) and will refer enquirers to the QLS. The number to call at the QLS is 3842 5843 or email h.moses@qls.com.au.