An injury that stops someone working creates two money problems at once. Income falls, and the cost of treatment and legal advice arrives when there is least to pay it with. No win, no fee legal services exist to deal with the second problem. What they cover when a claim fails differs from one firm to the next, and the difference can run to thousands of dollars.

The Times regularly covers the cost-of-living pressure on Australian households. For a family already managing higher mortgage repayments and grocery bills, losing one wage for six months can turn a tight budget into a monthly shortfall. In Queensland, the support available while a claim runs depends on how the injury happened. WorkCover Queensland pays weekly benefits to injured workers, but at a percentage of normal earnings that steps down the longer the claim continues. Someone hurt in a car crash or a fall in a public place has no equivalent weekly payment. Their lost wages are generally recovered as part of a settlement, which can take a year or more to arrive.

What Queensland law says about no win, no fee

The phrase has no fixed legal meaning. Queensland law instead regulates what a lawyer may charge on a speculative personal injury claim, where the lawyer is paid only if the claim succeeds.

Under the Legal Profession Act 2007 (Qld), legal fees on a successful claim cannot exceed half of what the client receives after statutory refunds (such as repayments to Medicare or Centrelink) and disbursements are deducted. This is known as the 50/50 rule. A lawyer may also charge an uplift fee for taking on the risk, capped at 25 per cent of the ordinary legal fees. Charging a percentage of the damages is not permitted in Queensland.

To take a hypothetical case, suppose a worker settles a common law claim for $200,000 and $40,000 goes to refunds and disbursements. Of the $160,000 left, the firm's fees could not exceed $80,000, leaving the worker at least $80,000. The cap is a ceiling. Many firms charge well under it, and the costs agreement, which a firm must provide in writing, should show how fees are calculated.

What a no win, no fee agreement covers if the claim loses

Some firms' agreements waive only the lawyer's professional fees, so a client may still owe expenses (also called outlays or disbursements) if the claim fails. Smiths Lawyers says its no win, no fee promise covers both legal fees and expenses, so clients pay neither if their case loses in court. Before signing with any firm, ask in writing what you would owe if the claim is unsuccessful.

Expenses in an injury claim are rarely small. They typically include specialist medical reports, hospital and employment records, court filing fees and barristers' fees. A single medico-legal report can cost thousands of dollars, and a contested claim may need several. Under an agreement that waives fees alone, those amounts can fall due when the claim fails, at the point the claimant has the least money to meet them.

A client's own costs are separate from the other side's. If a case goes to trial and loses, the court can order the unsuccessful party to pay some of the defendant's legal costs. Most Queensland injury claims settle before trial, and Queensland's injury claim laws require a compulsory conference before court proceedings start. A firm's written answer should still deal with adverse costs alongside its own fees.

There is a trade-off for claimants. A firm that carries the expenses on a lost claim bears more of the risk, so it may be more selective about which claims it accepts. An early, frank view of whether a claim is viable is part of what a client is paying for.

TPD claims through superannuation

A second source of money is often overlooked. Many Australians hold total and permanent disability (TPD) insurance inside their super fund, usually as default cover they never chose. Default cover generally applies to members aged 25 and over whose balance has reached $6,000. It is cancelled on accounts that receive no contributions for 16 months, unless the member opts to keep it.

A TPD benefit is a lump sum, paid when the insurer accepts that the member is unlikely to work again. Most policies inside super test this against any job the person is reasonably suited to by training or experience. A tradesperson who can no longer do physical work may therefore need medical evidence that office work is also beyond them.

The claim goes through the fund trustee, which passes it to the insurer. Because super is regulated federally, the process is the same wherever the member lives, and a declined claim can be taken to the Australian Financial Complaints Authority, which applies its own time limits. A TPD claim is separate from a workers' compensation or road accident claim, and an injured Queenslander may be entitled to pursue both. Anyone with more than one super account should check each, as cover in an older account may still be in force.

The same written question applies here. A client should know what they owe if the insurer declines the claim and a review fails.

Questions to ask before signing

• What will I owe in professional fees if the claim does not succeed?
• Who pays the expenses, such as medical reports and barristers' fees, if it fails?
• What happens with the other side's costs if the case loses at trial?
• How are fees calculated if the claim succeeds, and is an uplift fee charged?

A firm should be able to answer all four in its costs agreement before any work begins.

Further reading: About Smith's Lawyers

• Founded in 1996 by Principal Lawyer Greg Smith.
• Practises compensation law only.
• Handles personal injury claims in Queensland for injuries at work and on the road.
• Also acts on Queensland claims for injuries in public places.
• Takes superannuation TPD claims from anywhere in Australia.
• Has an office in Brisbane, with further offices on the Gold Coast and the Sunshine Coast.