In recent years ‘No Win, No Fee’ agreements have become increasingly popular as a way for people to access legal representation when they may not otherwise be able to afford to.
Such agreements, sometimes also known as ‘No Win, No Pay’ (and referred to as contingent or conditional-costs agreements by lawyers), are usually offered for personal injury compensation matters – a slip and fall in a public place, for example, or when someone has been injured in a motor vehicle accident caused by someone else’s negligence. Other legal issues, such as criminal or family law matters, are not appropriate for No Win, No Pay agreements.
In essence, such agreements allow people to engage a lawyer without paying legal fees unless their case is successful. If the case is unsuccessful, the client does not pay legal fees, although they may still be responsible for other costs, such as court fees. the law firm’s expenses incurred during the case, and the opposing party’s costs.
No Win, No Fee agreements are covered by strict professional and legislative rules – we’ll explain more about them in this article.
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Things to be aware of before agreeing to a No Win, No Fee agreement
While No Win, No Fee is a fairly simple phrase to understand, it’s important to be aware of what it actually means before signing on to such an agreement with a law firm.
As mentioned, this type of costs agreement is particularly popular for personal injury compensation cases. Reputable law firms, however, will generally only offer No Win No Fee arrangements once they have assessed your case and decided it has a good chance of success.
It’s also important to understand what a ‘win’ means in legal terms. Most commonly it means a judgment in your favour in a court, a settlement of a claim or any other agreement reached through dispute resolution which resolves the matter to the claimant’s satisfaction.
The term ‘No Fee’ also needs more accurate definition. Generally speaking the term refers to the legal representative’s professional charges and doesn’t encompass ‘disbursements’ – the other costs involved in taking legal action, such as court and lodgement fees, the cost of medical assessments, barristers’ fees, the fees paid to expert witnesses and other outlays on administration for the case.
Other risks of conditional costs agreements
All legal action comes with risk. There is always the chance a claim for compensation won’t succeed and you may be ordered by the court to pay the other party’s legal costs, regardless of whether you have a No Win, No Fee agreement in place with your legal representative.
It’s important to discuss at the outset with your lawyer whether an ‘uplift’ fee will be charged, which law firms are permitted to charge if the outcome of the case is successful. The uplift fee operates as a reward for the risk the law firm assumes if the case is unsuccessful and the client pays no fees. In some arrangements, this fee can be up to 25 per cent of the total legal costs.
There is also a legislative requirement known as the 50/50 rule, which places an upper limit on how much a law firm can charge a client in personal injury compensation claims, being 50 per cent of the settlement amount after refunds (e.g. to Medicare or Centrelink) and outlays have been deducted.
It’s also wise to ask whether interest will be charged on your account with the law firm from the time it is created, even if the fees are not payable until a successful outcome is achieved.
In summary
Laws applying to conditional costs agreements require that No win, No Fee agreements:
- must set out the circumstances that constitute a ‘successful outcome’ of the matter;
- may provide for the law firm’s outlays to be paid (possibly with interest) irrespective of the outcome of the matter;
- may provide for payment of an ‘uplift fee’;
- must be in writing, in clear plain language, and signed by the client;
- must contain a statement that the client has been informed of his/her right to seek independent legal advice before entering into the agreement;
- must contain a cooling‐off period of not less than five clear business days during which the client, by written notice, may terminate the agreement.
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Need more information on No Win, No Fee? Call our team
At ROC Legal, our expert compensation team are ready to help you if your claim relates to a road accident, public liability, workers’ compensation, total and permanent disability, and more. If you need more detail on No Win, No Fee agreements so that you can be represented by seasoned lawyers in your claim, call us as soon as possible for an initial no-obligation consultation.