Under the new legislation, claimants will not face legal costs if a case is unsuccessful, while the plaintiff lawyers will receive a contingency fee made up of the percentage of damages or settlements. The move was an attempt to fill Victoria’s under-utilised class action regime which has an average of five or less class actions filed per year. 

NSW Bar president Tim Game SC said the intention to introduce contingency fees for plaintiff solicitors in representative proceedings “should not be emulated”. 

“It also pre-empts an ongoing inquiry by the [federal parliamentary joint committee on corporation and financial services], which is currently investigating the consequences of allowing lawyers to enter into contingency fee agreements,” Mr Game said. 

The NSW Bar does not consider the policy to allow lawyers to enter fee arrangements like this as the proposal is “fraught and contrary to the public interest”. It is not satisfied the ethical concerns have been addressed or safeguards have been proposed to justify the support for contingency fees without risk to the administration of justice. 

“In the [association’s] view, contingency fees and a lawyers’ ethical considerations and professional obligations cannot be reconciled,” Mr Game said. “Contingency fees fundamentally undermine the independence of the profession by creating [an] appearance of conflict between a client’s interest and the lawyer’s own interest.”

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Mr Game added that while the association will continue to work closely with members and the Legal Services Commissioner to protect public interest and promote all best practices for cost disclosures and charges, it will not support contingency fees in NSW.

“Contingency fee regimes are so inimical to lawyers’ professional responsibilities, it is difficult to see how any effective safeguards could be formulated,” Mr Game said.