The ‘no win – no fee’ agreement is a conditional costs agreement. According to s 323 of Legal Profession Act 2007 (the Act), a conditional costs agreement means the payment of some, or all of the legal costs is conditional on the successful outcome of your matter. Lawyers and their clients can enter into this type of arrangement in any case except criminal matters or family law matters. The most common cases are personal injury claims and some types of deceased estate matters.
Generally speaking, if your lawyer has decided to take your case on a ‘no win – no fee’ basis, you only need to pay your lawyer if the case succeeds (typically, out of the final settlement money). A successful outcome means your lawyer is able to obtain compensation for you, or if your case goes to trial, a judgement of a court or tribunal is in your favour.
If on the other hand, your lawyer cannot obtain any compensation for you, then you will not need to pay legal fees under a ‘no win – no fee’ agreement. However, you should note that even if your case is lost, a law firm is still entitled to recover their outlays (also known as disbursement). These are monies the law firm has spent in pursuing your claim and include court filing fees, the cost of expert reports and barristers’ fees etc.
In addition, where your case cannot be settled out of court, you can instruct your lawyer to issue proceedings in trial. The risk here is that if your lawyer loses your case in court, you will be legally required to pay the other party’s legal costs regardless of whether you have a ‘no win – no fee’ costs agreement with your own lawyer.
The Act has imposed certain requirements on the form and content of the ‘no win – no fee’ agreement, in particular, the agreement:-
- Must set out what constitutes a ‘successful outcome’ of the matter;
- May provide for outlays to be paid (possibly with interest) irrespective of the outcome of the matter;
- My provide for payment of an ‘uplift fee’;
- Must be in writing, in clear language and signed by the client;
- Must contain a statement that the client has been informed of his/her right to seek independent legal advice before entering into the agreement;
- Must contain a cooling -off period of not less than five clear business days during which the client, by written notice, may terminate the agreement.
Therefore, before you enter into a ‘no win – no fee’ agreement, it is wise to check if the agreement has complied these requirements to avoid anything unexpected in the end.
We will introduce and talk about what is an ‘uplift fee’ and the ‘50/50’ rule in our next article.