High Court Judge has a crack AFR Wkend ed., page-8

Slater's WIP calculations are conservative. Relative to others I can't say as I don't study others but Slater has been conservative and that can be deduced by reviewing the accounts from 2007 through to 2015.

1. decide likelihood of a win, obviously if they consider it unlikely they wouldn't take it on; however some cases there is little history and in those few cases no WIP is booked

2. determine the likely payout based on experience of similar cases

3. record a % percentage of likely settlement at milestones of file compilation

4. multiply the % of likely settlement by the portion of case completed - timeframe estimated by similar cases

5. the case is settled and billed. The final bill will often contain an uplift due to using lower of range when determine likely settlement in previous milestones

So none of Slater PI WIP is based on hourly rates, it is all anchored on likely settlement derived from experience of similar cases

The current review will change how this is calculated. Adoption of AASB15 revenue recognition has prescribed principles to determine whether a portion of work is complete. This aim is to create uniformity across different industries that report partial completion of work as revenue in when the work extends beyond 12 months.

A primary difference will be tighter control over what can be determined as a distinct piece of completed work. For example, I doubt opening the file and collecting initial instructions will in future be considered a distinct piece of completed work but possibly preparing a file, with all evidence attached, and presented to a defendant (insurer) for settlement would be considered a complete piece of work.