"Works on Contingency? No, money down!" How does this work in Australia?
September 29, 2013 8:20 PM   Subscribe

You are, of course, not my Australian lawyer. However, my SO may soon be hiring one for a suit against a hospital. To ensure that the lawyer we're hiring is the kind that we think we're hiring, she's asked me what the difference (if any) is between a no-win, no fee lawyer, and a lawyer that is hired under a contingency agreement.

I don't pretend to be anything even remotely close to An Lawyer, but as I understand it, the difference is essentially as follows:

- A contingency agreement means you're on the hook up front for things like court costs, medical reports, investigators. You're not paying for the lawyer's own time and labour, but are paying for the cost of bringing the case to trial in the first place. Basically the same sort of costs you'd be paying if you represented yourself. If you win, you get your costs back as part of the settlement, and the lawyer is paid a pre-negotiated percentage of the settlement to cover their time and labour. If you lose, you're out your court costs, and may still be liable for the costs of the other party.

- A no-win no-fee lawyer, by contrast, covers all of the establishment costs of a suit up front. It doesn't really cost you anything to bring the case to court, and if you win the lawyers fees and disbursements (including court costs) are then established, negotiated, and deducted from the settlement amount. If you lose, you may still be liable for the costs of the other party, but the lawyer eats all the establishment costs, as well as their own time and effort.

Am I mistaken in this understanding? Is there something important I'm missing? I've heard Australian stories about shady no-win no-fee lawyers ratcheting up those costs and expenses, but in general what would be the advantage of hiring a contingency lawyer rather than a no-win no-fee lawyer? An expectation of a larger settlement at the back end? An expectation of more professional representation? What am I missing?
posted by MarchHare to Law & Government (6 answers total)
No-win no-fee lawyers will take you to the cleaners on settlement. Do not go with them unless there are no other options. They basically exist to fleece people.
posted by smoke at 8:49 PM on September 29, 2013 [1 favorite]

Also, if you pull out of the case then a no win- no fee lawyer will charge you the FULL FEE. This happened to me, in Australia and luckily it didn't break the bank. But you should never feel obligated to persue something that you might end up changing your mind on.
posted by Youremyworld at 8:50 PM on September 29, 2013

No, I think you've got it wrong here. They're the same thing. A no-win, no-fee lawyer is one that is operating under a contingency costs agreement.

I note you're in South Australia.

Contingency fees - where a lawyer gets a set percentage of any payout if you win - are not allowed.

The Australian Solicitors Conduct Rules 2012 as adopted by the Law Society of South Australia s16C define a complying contingency costs agreement as follows:

6C.3 A complying contingency costs agreement is one:-

16C.3.1 which relates to a litigious matter other than a criminal or matrimonial matter;

16C.3.2 which is entered into either at the commencement of the practitioner's retainer from the client or after initial investigation of the matter;

16C.3.3 which provides that in the event of the action being unsuccessful the practitioner either:-

16C.3.4 will not charge the client, or

16C.3.5 will charge the client only disbursements or some defined amount or proportion of disbursements;

16C.3.6 which relates to a matter where in the professional judgment of the practitioner the client's claim has some prospect of success but where the risk of the claim failing and of the client having to meet his or her own costs is significant;

16C.3.7 where the practitioner has before the signing of the agreement informed the client of the client's right to obtain independent legal advice and of the right to have the agreement reviewed by the Supreme Court pursuant to section 42(7) of the Legal Practitioners Act and of the right to have the fees charged reviewed by the Conduct Board under section 77A of the Legal Practitioners Act the agreement specifically records this;

16C.3.8 which:-

(i) is in writing and in plain English and sets out clearly the terms of the agreement and is signed by the client;

(ii) contains the provision that the client shall have a cooling off period of five clear business days from the signing of the contract during which he or she may, by giving notice in 14 writing to the practitioner, terminate the contingency fee agreement.

To translate:

- a contingency costs agreement can't be used for criminal or divorce proceedings

- a contingency costs agreement must be entered into at the start of the matter (so the lawyer can't work out that you're going to get a big payout, then get you to sign the agreement so that they can run up lots of fees and grab most of the payout)

- if the client loses, the lawyers don't get paid fees (ie, the lawyer's hourly rate), but the client will still have to pay disbursements (non-fee costs, including photocopying charges, filing charges, investigators...etc.), or some specified percentage of the disbursements

- a contingency costs agreement can only be used where the lawyer thinks the client has a reasonable chance of winning [but in practice, lawyers won't take on a case on a contingency basis unless they're pretty sure they'll win]

- the lawyers must tell their client about the right to have the costs reviewed if the client by the Supreme Court if the client disagrees with the bill

- the agreement must be in plain English

- there's a five day period after the client signs the agreement during which they can back out without penalty.

Basically, if you win, you have to pay the lawyers' full fees
. Some lawyers may put a cap on the fees.
posted by His thoughts were red thoughts at 9:48 PM on September 29, 2013 [1 favorite]

Best answer: You might want to give someone like the Legal Advice Clinic at the University of South Australia a call for some better advice - I haven't practiced in some time, and I never practiced in SA. The precise rules for this kind of thing vary from state to state.
posted by His thoughts were red thoughts at 9:57 PM on September 29, 2013 [1 favorite]

Both of these sound like good ways to get ripped off. When I hear "contingency agreement" the "contingency" sounds like you winning, in which case they take your payout. "No win, no fee" does this for sure.
posted by turbid dahlia at 10:18 PM on September 29, 2013

Keep in mind that your lawyer needs to explain this to you -- clearly -- and put it in writing -- again, clearly -- in the retainer agreement. Make sure you understand these payment issues before they start representing you in a lawsuit. If they fail to make this clear, that is a red flag.
posted by J. Wilson at 5:30 AM on September 30, 2013

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