John Kahn 06 Oct 2020
Many lawyers grasp the attention of clients with the phrase ‘No Win No Fee’ and succeed in entering into an engagement contract with their clients. This literally means that lawyers will only receive their fees if they win the assigned case or successfully negotiate a settlement agreement for the client. This is a risk-taking contract for a lawyer because they won’t bill in case of a loss.
These kinds of contracts are unavailable in criminal and family cases. Usually only cases in which it is possible for both sides to reach a settlement agreement go through the process of a No Win No Fee contract. Law firms which specialise in traffic accidents generally offer these forms of contracts. The No Win No Fee contract could be one way of hiring a lawyer for people who aren’t financially stable as they would not have to make a large payment at once.
But there is something we should keep in mind. Generally, expenses incurred for the cases are not covered by lawyers’ fees under the aforementioned contracts. Expenses refer to the amount of money the lawyer has spent in relation to the case. For example, court fees, barrister fees, expert fees, etc would be included in expenses. All No Win No Fee contracts are required to specify whether these kinds of expenses are included in the contract or not.
Furthermore, another thing to bear in mind is that No Win No Fee contracts do not cover fees for the other side’s lawyers. In other words, it is possible that losing parties would bear the other side’s lawyer fees if their case is not successful. Even if you have a No Win No Fee contract, this does not mean that you are fully exempted from being responsible for fees of the other side’s lawyer. Clients often mistakenly think that they are not required to pay any fee if their case is not successful.
In the case of a No Win No Fee contract, the following clauses must be mentioned:
1. What circumstances will be considered a ‘win’ of the case?
● For example, consider the following outcomes: a party withdraws its claim, a court partially recognises a claim or a case is settled through arbitration or settlement.
2. Regardless of the win or loss of the case, what expenses are necessary?
3. Will there be an uplift fee? If there is, how much would it be?
● An uplift fee refers to the payment lawyers can receive in addition in case of a win. Since the lawyer had to bear risks during the case, they are able to bill payments in addition to the original fees. However, this uplift fee cannot exceed 25% of the original fees, and the contract must stipulate how much can be charged.
4. The contract must be written with full text, and the client has to personally sign.
5. Before signing the contract, clients should be able to get advice from other lawyers.
6. It has to be mentioned that the contract can be terminated in five days.
In cases such as a traffic accident, the 50/50 Rule applies. The 50/50 Rule states that lawyers cannot charge more than 50% of the monies remaining from any settlement amount after deduction of all expenses incurred. For example, if $50,000 has been received from settlement agreement fees, after deducting $1,000 in Medicare fees, $6,000 in Centrelink fees and $9,000 in other fees including an expert opinion, the maximum the lawyer can bill is $17,000. There are lawyers who apply the 50/50 Rule before expenses and ask for 50% of the settlement amount, but this kind of action is illegal.
Another point to consider while carrying out a No Win No Fee contract is that if the lawyer gets replaced during the process, the replaced lawyer can bill the amount that has been spent.
The following are the factors you must go over before signing a contract.
1. Read and understand the contract thoroughly. If there is anything you don’t understand, you should ask the lawyer about it.
2. Carefully review the terms and conditions for 5 days. If anything is unclear, get advice from a different lawyer.
3. If you do not completely understand the No Win No Fee contract and its conditions, this too requires advice from a different lawyer.
4. Know the specific incidental expenses and the expenditure, and whether the lawyer has an uplift fee and if they do, the amount of the uplift fee. Due to these incidental expenses and uplift fees, there might not be much money left in your hands even after winning the case.
5. Confirm the total estimated payment fees. Even if it is a No Win No Fee, the lawyer has a duty to rationally calculate the amount of time spent and inform the client.
6. Remember that the 50/50 Rule applies to a personal injury case.
7. Even if it is a No Win No Fee contract, remember that you might be in charge of fees of the other side’s lawyer after a loss, and if a lawyer is replaced during the process the previous lawyer might also bill you according to the time spent on the case until then.
In conclusion, do not hastily sign a No Win No Fee contract without consideration. If these forms of contracts or the terms and conditions confuse you, we recommend receiving advice from the Bar Association or a different lawyer.