No Win No Fee Costs Agreements (also known as Conditional Costs Agreements) between solicitors and clients have become more and more common in our legal system particularly in respect of litigation involving personal injury, professional/medical negligence and estate and family provision litigation. They cannot be entered in relation to matters relating to criminal law or family law.
Our justice system in Australia recognises the value of No Win No Fee Costs Agreements which provide access to justice for people who do not otherwise have the means to fund their litigation.
In its purest form a No Win No Fee Costs Agreement is an agreement between a solicitor and his or her client to carry out work in respect of the client’s claim, on the basis that no fee is chargeable or charged until the litigation is brought to a successful conclusion (a ‘win’).
In the absence of a term in the agreement as to what ‘win’ means, at common law in Australia a ‘win’ will be construed to mean a financial benefit to the client.
There is a distinction between solicitor’s professional fees which are the charges for the work conducted by the solicitor (‘Professional Fees’); and third party costs incurred by your solicitor in the course of the conduct of your case (such as expert report fees, court filing fees, barrister’s fees, subpoena conduct money etc) (‘Disbursements’).
Under a No Win No Fee Costs Agreement the client’s solicitor’s Professional Fees are payable only on a successful conclusion to the case.
However, No Win No Fee Costs Agreements commonly require you to pay Disbursements regardless of the outcome of the case.
You will also likely have to pay the Professional Fees and Disbursements of the other party if you are unsuccessful. This may be as much as or more than the amount which you would have had to pay your own solicitor had you been successful.
No. It is extremely important to understand the terms of the agreement proposed before you enter a No Win No Fee Costs Agreement with your solicitor.
No Win No Fee Costs Agreements often vary as to the definition of ‘successful conclusion’ (‘win’) which triggers the obligation to pay the solicitor’s Professional Fees. By way of example, successful conclusion may include when you:
• Reject your solicitor’s advice regarding a settlement offer;
• Decide not to further pursue the case any further after work has been done; or
• Instruct another solicitor without providing proper security for the first solicitor’s fees.
In NSW, No Win No Fee Costs Agreements are regulated by the Legal Profession Uniform Law (NSW) (‘LPUL’).
For a No Win No Fee Costs Agreement to be valid in NSW, the agreement must:
• Be in writing and in plain language;
• Set out the circumstances that constitute the successful outcome of the matter to which it relates;
• Be signed by the client and include a statement that the client has been informed of their rights to seek independent legal advice before entering into the agreement.
The failure to abide by these requirements may result in disciplinary implications for the solicitor and prevent the recovery of all the solicitor’s Professional Fees.
However, just because there is no written agreement does not necessarily mean that a solicitor cannot recover a portion of their fees from their client. The solicitor may still have restitutionary rights available to them to pursue the client for payment of their fees in quantum meruit.
It is in your interests to ensure that you have a valid and binding No Win No Fee Costs Agreement and that you fully understand the terms before you enter into the agreement.
Depending on the written terms of the No Win No Fee Costs Agreement, a solicitor may charge you more than you receive.
However, in the absence of any written agreement to the contrary, under a No Win No Fee Costs Agreement a solicitor cannot charge you more than the amount received under the settlement, judgment, or award. In other words, you do not pay anything out of your pocket for your solicitor’s fees.
If you are successful in the litigation, the other party will generally be liable to pay a portion of your legal fees. However, the fees payable will not usually cover the whole of your solicitor’s fees and the gap between the solicitor’s fees and the fees payable by the defendant will be payable by you from the settlement, judgment or award.
No. In NSW solicitors are prohibited from entering into agreements that calculate the amount of Professional Fees by reference to the amount of the settlement or award. There are serious disciplinary consequences for solicitors who violate the law in this regard.
Solicitors can however enter agreements which require payment of an uplift fee, that is a percentage of up to 25% of the base fees charged. You must however agree to the uplift and be given proper estimates of the amount of the uplift.
For advice on your personal injury or professional/medical negligence claim call The Law Office of Conrad Curry (02) 40500330 or book online.