Written by: David Cossalter Signing a costs agreement with a personal injury lawyer is a significant step, and it should never feel rushed, confusing, or pressured.
A costs agreement sets out the financial relationship between you and your lawyer: how fees are calculated, what expenses you may be responsible for, and what happens in different situations. Getting this right from the start protects both sides and prevents unpleasant surprises later.
This guide explains what a costs agreement should contain, how it should be presented, and the red flags to look for, because understanding the document is just as important as signing it.
Elements of a clear cost agreement
A No Win No Fee costs agreement should do more than simply list charges. It should clearly explain what you may have to pay, when, and under what circumstances. At a minimum, it should outline the fee structure, the types of case costs you may be responsible for, and what happens if your claim succeeds or if it doesn’t.
Think of it as a roadmap for your financial relationship with your lawyer. Before signing, you should understand every element and how it applies to your case.
Key takeaway
The initial cost estimate in a No Win No Fee agreement can seem high, but it reflects the total potential costs if the case runs through every stage, including mediation, trial, and all related steps. Lawyers are required to update this estimate if costs are likely to exceed the original figure.
1. The fee structure
What it should say | In Australia, No Win No Fee lawyers cannot charge contingency fees (a percentage of your compensation). For personal injury and most other individual claims, every state and territory requires lawyers to bill for the actual legal work performed. This is usually hourly rates, fixed fees, or scale costs. The only exception is in Victoria for class actions, where a court may approve a contingency-fee model. This does not apply to personal injury claims by individuals. A proper cost agreement will clearly outline:
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What should be explained | Your cost agreement should also explain:
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Legal insight
A good lawyer will be transparent about this from the start. While legal costs in many No Win No Fee matters often fall within a broad range of 25–40% of the final settlement, this is not a fixed percentage applied to your compensation. Legal fees must be fair and reasonable, as required by professional and court regulations, and are based on the work undertaken, time spent, and disbursements incurred. A transparent lawyer will explain all costs upfront so you know exactly how your fees are calculated.
Example fee calculations
To illustrate how No Win No Fee arrangements work, here’s a simple example. Your legal costs are based on the work done by your lawyer, not a percentage of the settlement. Disbursements—costs paid on your behalf, like expert reports or medical records—are separate and are deducted from your settlement alongside the agreed legal fees.
Scenario
- Settlement: $100,000
- Disbursements (paid on your behalf): $10,000
- Agreed legal fees: $25,000
- Net amount to you: $65,000
It’s important that your agreement clearly explains:
- How your legal fees are calculated
- Which costs are considered disbursements
- How deductions are applied.
2. Case costs and disbursements
What it should say | The agreement should clearly identify what constitutes case costs and how they’re handled. Common costs include:
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What should be explained |
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Our approach
At GMP Law, we advance case costs, meaning we pay experts, court fees, and other expenses as we go, and these are reimbursed from your settlement. You don’t pay anything up front. If your case is unsuccessful and you don’t recover any compensation, you don’t owe us for these advanced costs. This is clearly stated in our cost agreement. Not all firms operate this way, so it’s crucial you understand your specific firm’s approach.
3. What happens if you lose
What it should say |
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What should be explained | Your lawyer should honestly discuss the risk of an unsuccessful outcome and ensure you understand your potential exposure. While no one wants to focus on losing, you deserve to understand the worst-case scenario. |
4. What happens if you win
What it should say | When you receive a settlement or judgment:
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What should be explained | You should understand that while your lawyer provides advice and recommendations, you ultimately decide whether to accept a settlement. No ethical lawyer should pressure you to accept an offer you’re uncomfortable with. The cost agreement should clarify that significant settlement decisions require your informed consent. |
5. Communication and updates
What it should say | While not always in the costs agreement itself, good firms will clarify:
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What should be explained | You should understand who you’ll actually be working with day-to-day. Will the partner you met with handle your case personally, or will you be paired with another lawyer within their team? Neither is inherently wrong, but you deserve to know. |
6. What happens if you change lawyers
What it should say | If you decide to end the relationship with your lawyer (which is your right), the agreement should explain:
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What should be explained | While lawyers deserve fair compensation for work performed, changing lawyers shouldn’t be prohibitively expensive or complicated. The terms should be reasonable and transparent. |
How a cost agreement should be presented to you
A cost agreement isn’t just another form to sign, it’s a legally binding contract that determines how your lawyer will charge you, what costs you may be responsible for, and what rights you have throughout the process.
A good lawyer will treat this as an important conversation, not a paperwork formality. Below are the key things you should expect when a cost agreement is presented to you:
1. Clear, plain language
Your cost agreement should be written in language you can understand. While some legal terminology is unavoidable, the overall document should feel accessible and straightforward.
If you find yourself confused about basic terms or unsure what you’re agreeing to, that’s a problem, not a failing on your part. Good lawyers take complex concepts and explain them clearly and simply.
2. Verbal explanation
You should never be handed a cost agreement and asked to sign it without a proper explanation.
Your lawyer should:
- Walk you through the key terms
- Explain how the fee structure works with practical examples
- Clarify what costs you may be responsible for
- Answer every question you have
- Make sure you genuinely understand before asking you to sign.
If a lawyer appears rushed, dismissive of your questions, or irritated that you want clarification, that’s a red flag about the relationship, not just the document in front of you.
3. Time to read and consider
You should always be given time to read the agreement carefully, take it home if you want to, and even seek independent advice.
Be cautious if:
- You’re pressured to sign immediately
- You’re told, “don’t worry, it’s standard”
- Your questions are brushed aside
- You’re made to feel foolish for wanting to understand the terms.
These behaviours suggest a lawyer who prioritises signing clients over serving them well, and that’s not someone you want handling your case.
What to watch out for: Red flags in cost agreements
Not all personal injury law firms operate with the same level of transparency, and some cost agreements contain terms that can disadvantage clients who aren’t familiar with what to look for. Understanding the warning signs can help you avoid unexpected expenses, unreasonable conditions, or a lawyer–client relationship that doesn’t serve your best interests.
Below are some common red flags and what an acceptable, ethical alternative should look like.
Unclear or hidden fees
Red flag | The agreement doesn’t clearly explain how your lawyer’s fees will be calculated, or it refers vaguely to things like “reasonable fees” or “fees to be determined.” |
What’s acceptable | Your costs agreement should clearly outline how your lawyer’s fees are calculated, including hourly rates, disbursements, and any permitted uplift fee. |
Vague cost explanations
Red flag | The agreement mentions “case costs” or “disbursements” without explaining what these are or how they’ll be managed. |
What’s acceptable | The agreement should clearly explain that case costs (expert reports, court filing fees, medical record fees, investigation costs) are separate from legal fees and whether you pay these upfront or the firm advances these. |
No cooling-off period
Red flag | You’re told once you sign, you’re locked in immediately with no opportunity to reconsider. |
What’s acceptable | Some firms offer a cooling-off period during which you can cancel without penalty. Your agreement should clearly state this if applicable. |
We offer a 90-day free trial
We’re so confident in our service that we offer a 90-day risk-free trial. If you’re not completely satisfied within that period, you can walk away with no obligation and no charge for the work completed. It’s our way of showing our commitment to your satisfaction and building trust through action.
Pressure tactics
Red flag | You’re told, “we can’t help you unless you sign immediately.” |
What’s acceptable | A good lawyer wants you to make an informed, confident decision. They’ll give you time, answer questions, and respect your need to consider carefully. |
Questions you should ask before signing your cost agreement
Don’t be shy about asking questions. A good lawyer welcomes them.
Here are important questions to ensure you understand your cost agreement:
- Can you show me an example calculation so I understand what I’ll net from a settlement?
- What are typical case costs for a claim like mine?
- Will you consult with me before incurring significant expenses?
- How will I be updated on costs as they’re incurred?
- What are the realistic risks in my case?
A good personal injury lawyer will answer every one of these questions clearly and patiently. If they’re evasive, dismissive, or irritated, seriously reconsider whether this is the right lawyer for you.
What good practice looks like at GMP Law
Your cost agreement is a legally binding contract, and you deserve to understand it fully before signing. Here’s how we make that process clear, transparent, and client-focused.
Our philosophy
We believe informed clients make better decisions. We take the time to explain your cost agreement thoroughly. No rushing, no pressure.
Our cost agreement
Our agreements are written in plain language and clearly outline how fees are calculated, how disbursements work, and what happens in different scenarios. Before you sign, we walk you through every clause, answer your questions, and ensure you’re completely comfortable. You’re encouraged to take the agreement home, discuss it with family, or seek independent advice. There are no hidden fees or unclear terms.
Our fee structure
We operate on a No Win No Fee basis: if you don’t recover compensation, you don’t pay our legal fees. We cover all case costs upfront (such as expert reports and court fees), and these are reimbursed only if your claim succeeds. If your claim is unsuccessful, you don’t repay those costs.
Satisfaction guarantee
If our service fails to meet the high standards we set, we’ll reduce our fees. We are the only Australian firm that backs our service with a written cost reduction promise, giving you total confidence in your claim.
Our commitment
At GMP Law, informed and confident clients are the foundation of strong outcomes. If you have questions about our cost agreement—or another firm’s—we’ll give you honest, transparent guidance. Trust is essential, and we work hard to earn it from day one.
