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‘No win no fee’ explained: What does it actually mean?
You might have heard about ‘no win, no fee’ agreements that certain law firms offer existing and prospective clients. This type of arrangement is also known as a conditional agreement and government sources often refer to it as a conditional cost agreement.
Many people find this type of offer an attractive prospect, due to the fact that upfront legal fees can be waived. However, it can prove confusing, so we thought we would explore this legal term more fully, to keep you best informed about the particulars.
How does ‘no win no fee’ work?
Some people assume a no win no fee agreement means that if you win your case, you incur no fees at all. Unfortunately this is not accurate.
The conditional costs agreement is prepared by a solicitor and details the conditions under which payments are structured.
For example, the solicitor agrees to defer their billable hours until a successful outcome has transpired.
Usually, the solicitor then deducts their fees from the settlement of the money you receive as compensation.
This assumes that you are victorious in your claim.
What happens if you lose a no win no fee case?
In the event that the outcome of your case is not successful, you are still obligated to pay the solicitor’s fees. Plus, you may have to pay the other party’s fees as well. These are referred to as ordered costs.
The Law Society of NSW’s no win, no pay section clearly explains what legal fees you can expect to pay. There is also a specific note that addresses what happens if your case is unsuccessful and the legal costs you may be required to pay.
Unfortunately, many people are unaware of these fees when they hear or read the terms ‘no win, no fee’ or no win, no pay.
This is why it’s very important that you read the agreement carefully before signing. Similarly, you should ask your lawyer to explain any part that might seem ambiguous.
No win no fee explained: the different fees
It’s imperative that you understand the different types of fees involved in a legal matter. Prospective clients often ask what legal fees are actually payable when they make a claim.
The two types of legal costs are:
- Professional fees
However the ‘no win no fee’ agreement only covers one of them.
These fees relate to the services that have been provided by your lawyer. This also includes maintenance fees for administrative staff who have assisted your lawyer in preparing the claim.
These refer to the expenses your lawyer has paid on your behalf. For example, court fees, barrister fees, medical reports etc.
To read more, the Australian Federal Court outlines the legal fees and costs that are included.
No win no fee Disbursements
Disbursements are not included as part of the ‘no win no fee’ agreement. These costs relate to your case and are paid by your lawyer. These must be repaid and even if your claim is unsuccessful.
The Law Society of NSW highlighted another important aspect regarding disbursements. Solicitors can “ask clients for money in advance” for disbursements. What’s important to remember is that a solicitor is required to provide you with a detailed account of how this money was spent.
What does a successful outcome mean?
Professional fees are outlined in the ‘no win no fee’ agreement and it’s this aspect that most refer to when they’re offering deferred payments.
Law firms interpret the phrase ‘successful outcome’ differently and the time frame attributed varies. This is why it’s essential that you closely review the agreement prior to signing, paying special attention to the definition of a ‘successful outcome’.
No win no fee legal agreement
Can you terminate your agreement and engage another lawyer?
Yes you can. However, if you terminate or take your file elsewhere, a clause exists requiring you to pay for this change in circumstances.
Depending on the law firm, the client or firm may be permitted to sign an agreement/undertaking that the fees will be paid to the firm first, upon successful completion.
It’s important to note that usually disbursements need to be paid upon termination and prior to the file being released.
What types of legal matters are appropriate for conditional agreements?
Conditional agreements can be extremely beneficial for certain types of claims. These include:
- Personal injury
- public liability
- Workers’ compensation
- Medical negligence
An example of a personal injury matter can be an MVA – a motor vehicle accident.
Public liability claims according to the NSW Service, care for damage to your car or other property on NSW roads. “If your car or other property is damaged due to the condition of a NSW road”, you may be entitled to receive compensation. This is a prime example of a public liability claim that no win no fee lawyers handle.
If you experience an injury while at work, you are entitled to claim workers compensation. This needs to be addressed quickly and in NSW, within 6 months from the date of the injury.
Engaging a no win no fee lawyer helps you to expedite the process, so that you receive the funds while you’re recovering from the injury.
SIRA (state insurance regulatory authority) is the NSW government body that assesses workers’ compensation matters. SIRA outlines the different types of claims that are available if you suffer a work-related injury.
Medical negligence claims occur when you suffer an injury as a result of a medical practitioner’s wrongdoing. These claims, often referred to as medical malpractice claims, are usually made against doctors and sometimes even hospitals.
Other types of no win no pay claims
Some lawyers accept deferred payments in the area of Family law. For example, in certain property matters where the property is going to be sold or the client is going to receive a lump sum payment. Such matters are determined on individual merits.
Why a no win no fee retainer is so beneficial
There are many types of claims like the aforementioned, where a deferred payment is highly advantageous. No one likes being sick and a sudden injury or medical condition is very confronting. During these extremely difficult periods, the last thing you want to think about is how to pay a lawyer to help you. Focusing on your health and well-being needs to take priority.
Especially when injured or sick and unable to work, it is a very scary prospect of trying to ‘right the wrong’ in the face of financial anxiety. This type of deferred payment agreement enables you to remove the additional stress that legal fees often cause.
Additional resources regarding no win no pay
For further information about no win no pay agreements, the following are some great resources:
- The legal services council prepared a PDF about no win no fee and explaining some of the intrigues.
- NSW, OLSW (office of the legal services commissioner) prepared a document outlining some of the questions many people ask with respect to deferred payments.
- The Victorian government no win no fee fact sheet is a great resource if you would like to learn more.
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