Introduction
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 litigation involving personal injury, professional/medical negligence, and estate and family provision litigation. They cannot be entered into in relation to criminal law or family law. The Australian legal system 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.
What is a No Win No Fee Costs Agreement?
In its simplest form, a No Win No Fee Costs Agreement is an agreement between a solicitor and their 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 outcome (a “win”). In the absence of a term in the agreement as to what “win” means, at common law in Australia, a “win” is construed as meaning a financial benefit to the client.
What are Disbursements?
Disbursements are third-party costs incurred by the firm as part of investigating and running your case. They include costs such as expert report fees, court filing fees, barrister’s fees, and subpoena conduct money. Disbursements are distinct from a solicitor’s professional fees, which are what we charge for the work we do (usually on an hourly rate basis).
Will I have to pay anything if I’m unsuccessful?
Under a No Win No Fee Costs Agreement, professional fees are payable only if you have a successful outcome. However, these agreements commonly require you to pay disbursements regardless of the outcome of the case.
You may also have to pay the costs (professional fees and disbursements) of the defendant if you are unsuccessful. However, as we move forward with your case, we will constantly be evaluating the likelihood of success to minimise your exposure to this risk.
Are all No Win No Fee Costs Agreements the same?
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.
These agreements often vary as to the definition of “successful outcome” or “win,” which triggers the obligation to pay the law firm’s professional fees. Examples of what may be defined as a “successful outcome” include a decision by you to:
- Reject your solicitor’s advice regarding a settlement offer
- Not pursue the case any further after substantial work has been done
- Instruct another solicitor without providing proper security for the first solicitor’s fees
Does a No Win No Fee Costs Agreement need to be in writing?
In NSW, these agreements are regulated by the Legal Profession Uniform Law (NSW) (the “Uniform Law”).
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 a successful outcome
- Be signed by the client
- Include a statement that the client has been informed of their right to seek independent legal advice
Failure to meet these requirements may result in disciplinary consequences for the solicitor and prevent the recovery of all professional fees.
However, just because there is no written agreement does not necessarily mean that a solicitor cannot recover a portion of their fees. The solicitor may still have restitutionary rights to pursue the client for payment of fees on a quantum meruit basis.
It is in your best interest to ensure you have a valid and binding agreement and that you fully understand the terms before entering into it.
Can my solicitor charge me more than what I receive?
In the absence of any written agreement to the contrary, a solicitor cannot charge you more than the amount you receive as part of a successful outcome. In other words, you would not have to pay anything out of your own pocket.
However, there may be terms in your agreement that entitle the solicitor to charge more than you receive. It’s essential to clarify this in advance.
Is the other party obliged to pay my legal fees if I win?
If you are successful, the other party will generally be liable to pay a portion of your costs. However, this usually covers only 60–80% of your legal fees. You would be responsible for paying the remaining gap (likely out of your compensation).
Can a solicitor charge me a percentage of the settlement, judgment or award?
No. In NSW, solicitors are prohibited from charging professional fees based on a percentage of the settlement or award. There are serious disciplinary consequences for violating this law.
However, solicitors may charge an uplift fee, which is up to 25% of their base professional fees. You must agree to this uplift and be provided with an estimate of the uplift amount.
For advice on your personal injury or professional/medical negligence claim, call The Law Office of Conrad Curry at (02) 4050 0330 or book online.