No-Win-No-Fee arrangements proceed on the basis that clients will not be charged fees unless they ‘win’ the case. For the purpose of these agreements, a settlement in which the client receives a sum of money is defined as a win. While these arrangements may appeal to those who cannot afford to pay upfront legal fees, there are issues that need to be considered before agreeing to such an arrangement.
No-win, No-fee arrangements can cause clients to question the advice given to them by their lawyer
A lawyer may work on a client’s case for months, often years. If the ongoing legal fees become high, the client may form the view that the lawyer may have a vested interest in them settling the case, so the lawyer can be paid and avoid the possibility of losing the case. In some instances, accepting an offer may be the best course of action for a client. However, the key issue here is that the client may question whether the advice their lawyer is providing is truly in their best interests or is being influenced by other considerations.
No-win, No-fee arrangements may create a false air of confidence
All lawyers have an obligation not to commence court proceedings on behalf of a client, unless they believe that the claim has reasonable prospects of success. However, people may think if a lawyer is prepared to take on their case on a no-win, no-fee basis, that they must be almost certain, or almost guaranteed, to win their case. That is not the case. Experienced lawyers are aware that even cases that appear to be strong at the commencement of the matter, can become weaker as the case progresses, due to the evidence presented by the other side. Indeed, even the strongest cases on paper can be significantly undermined by cross-examination at the hearing and the Judge who hears the case, may have a completely different view of it, than either of the parties involved. Litigation almost always involves a significant amount of risk, and no lawyer can ever guarantee the outcome of litigation.
No-win, No-fee arrangements – read the small print
No-Win-No-Fee cost agreements need to be read carefully. These cost agreements often contain a clause which provides that the client becomes liable to pay the legal fees if they do not follow their lawyer’s advice. It may appear trivial at first, but what if your lawyer’s advice is to settle? If you don’t follow that advice, the legal fees accrued may become payable. In circumstances like this, the client may feel the financial pressure to accept a settlement.
No-win, No-fee arrangements – beware of the uplift fee
Some No-win, No-Fee agreements may exclude certain disbursements or other fees from the arrangement, meaning that you will be liable to pay for those fees or expenses regardless of whether you win. For example, additional barrister’s fees, court fees and third-party costs are often excluded from the No-win, No-fee arrangement.
In NSW, solicitors are permitted to include a clause in a No-win, No-Fee cost agreement, enabling them to charge up to 25% more than the total fees incurred. These fees are an additional reward for the lawyers for waiting a period of time to be paid and for taking the risk that the claim could fail and they will not be paid. If the uplift fee is added to the legal fees to be paid it will substantially increase the overall amount to be paid by the client.
Other options
It is important to know that a No-Win-No-Fee arrangement is not the only alternative payment arrangement available to clients. We offer deferred payment arrangements in certain circumstances.
At MJM Lawyers we have ongoing transparent communication with your clients about legal fees.
If you would like to speak to one of our expert lawyers about your case or our fee payment arrangements, please contact us.
Disclaimer: This document contains information of a general nature only and is not intended to be used as advice in relation to a specific matter. Although every care has been taken in preparing the document, it may not be accurate or complete, particularly in the context of specific circumstances. MJM Lawyers disclaims responsibility for any errors or omissions.
