How much should your lawyer charge you for your property damage claim arising from motor accidents (i.e. Non-Injury Motor Accident (“NIMA”) claims)?
- Your claim against the Third Party concluded at $1,676.80. But your lawyer presented you with a bill for $4,000.00? You may feel “ripped off” as you wonder why a small claim would incur so much legal fees. Are legal fees sucking away your claim proceeds?
- In this article, in the context of property damage claims from motor accidents (i.e. Non-Injury Motor Accident (“NIMA”) claims), we will discuss 2 things:
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- The meaning of “legal fees”;
- How much “costs” are considered reasonable for NIMA claims.
Meaning of “legal fees”
- “Legal fees” mean “costs”. “Costs” sound uncomfortable on the lips. When you receive a bill from your lawyer and saw the word “costs”, remind yourself it actually means “legal fees”. Costs refer to the lawyers’ remuneration for work done for you.
- Apart from costs, you need to pay your lawyer’s “disbursements”. Disbursements refer to the expenses incurred by your lawyer in acting for you. For NIMA claims, that would mean expenses for the following: filing of documents in court, GIA reports and LTA searches, process service fees, photocopy and postage, survey/SJE report etc. Your lawyer doesn’t earn from disbursements.
- Remember: legal fees = costs + disbursements. In the bill, a breakdown for “disbursements” would be given. It is “costs” that often cause misunderstanding.
How much “costs” are considered reasonable for NIMA claims.
- Thankfully, the law provides for scaled costs in NIMA claims. Scaled costs mean that costs are pegged at the stage at which proceedings conclude. We will focus on three stages in this article.
#1: Pre-writ stage
- Well done if your lawyer manages to settle your claim at this stage. This means your claim never entered the court process. How much costs your lawyer can charge depends on the quantum of the claim settled:
Table 1: Obtained from Appendix C of the State Courts Practice Directions (as of 10 October 2021)
- So, if the quantum of claim settled was $8,000, your lawyer may charge you between $300 – $700, probably closer to $700 than $300. Conversely, if quantum was $2,000, your lawyer would probably charge closer to $300 than $700. But costs may not always follow a linear relationship with quantum. It may be a small victory, but a hard fought one! For instance:
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- the tortfeasor was unidentified and your lawyer expended a lot of effort to ascertain his identity;
- liability was disputed by the insurer, which necessitated a lot of evidence collation by your lawyer and several rounds of negotiation.
#2: Close of pleadings
- The claim entered the court process and the Third Party (now known as the Defendant) had filed his defence.
- Unlike stage 1 where costs depend mainly on quantum of claim settled, in stage 2 (and 3), costs also depend on the stage at which the claim was settled. We illustrate by reproducing the table of costs for NIMA claims in the Rules of Court:
Table 2: Obtained from Order 59 Appendix 2 of the Rules of Court (as of 10 October 2021)
- So, for a claim settled at $3,000 after a few Court Dispute Resolution (“CDR”) hearings, the stage at which it was settled would be “Where defence is served”. The applicable costs scale would be $1,200 – $1,500.
Costs of additional items
- Do not be alarmed if – at this stage – your lawyer charged you costs at $1,700 ($200 in excess of the maximum $1,500) for the same claim. This is because additional costs may apply if:
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- Substituted service was granted by the court; or
- There were at least 2 Defendants named in the writ; or
- The pleadings had to be amended.
- Any of the items in [12] will entitle your lawyer to charge extra for costs. If your lawyer had applied for substituted service, u9nder the rules of court, he can charge an extra $300 on top of the $1,400 (within the costs scale in Table 2) for the main action. $300 + $1,400 = $1,500.
#3: Exchange of Affidavits of Evidence-in-Chief
- If parties cannot settle despite a number of CDR hearings, the court will give directions to prepare their Affidavits of Evidence-in-Chief (AEICs). Think of AEICs as a short story coming from a witness whereby he recounts his role in the accident and encloses the documents to prove his story. This story will be read by the judge, so it had better be true!
- For most NIMA claims, a claimant would need 3 x AEICs. 3 stories coming from 3 witnesses who played different roles in the accident: the claimant who saw his vehicle being damaged; the repairer who repaired the claimant’s vehicle; the rental company’s representative who rented a replacement vehicle to the claimant during the period of repairs.
- How much costs would writing 3 stories cost? For a claim less than $10,000, the costs scale would be $1,800 – $2,800. If additional items apply (see paragraph 12), then total costs may exceed $2,800.
Conclusion
- Let’s revisit the example cited at the beginning of this article. A bill for $4,000.00 for a claim concluded at $1,676.80. It’s a real-life example taken from the Firm. The breakdown of $4,000.00 is as follows:
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- Disbursements: $1,500
- Costs: $2,500
- The claim was settled after AEICs were exchanged. Using Table 2, cost scale would be: $1,800 – $2,800. The Firm’s submitted costs was within this scale.
- Next time when you receive a bill from your lawyer, do not jump to conclusion if the amount seems disproportionate to your claim. Ask yourself if the amount refers to both costs and disbursements. After you have ascertained what the costs (only) are, ask what was the stage (in court) at which it was concluded and cross-reference with the cost scales laid out in Tables 1 and 2 above.