PETER GORDON, senior partner at plaintiff law firm Slater & Gordon and Herald Sun newspaper columnist Andrew Bolt are embroiled in a bitter debate over no-win, no-fee arrangements.
Bolt started the fracas in a March edition of the Melbourne paper with an opinion piece in which he argued that law firms using no-win, no-fee arrangements should agree to indemnify the opposing party if it won, on the basis that the opposing party had little or no chance of recovering legal costs.
In his article, Bolt cited the $700,000 settlement paid by the Victorian government to S11 protestors who claimed they were bashed by police at a violent blockade in 2000 as evidence that there was something wrong with the system. He said if the court case had proceeded and the protestors represented by Slater & Gordon had lost, the police would have had no chance of recovering their legal costs “from people whose worldly assets didn’t go much beyond two placards, a beanie and a government handout”.
“No wonder the police insurer figured it was on a hiding to nothing. Better to pay the protestors $700,000 to go away, than to fight in court and be left with legal costs even higher, win or lose,” Bolt wrote.
However, Gordon responded with an opinion piece of his own several weeks later, accusing Bolt of getting many of the facts in his article wrong and stating that lawyers operating on a no-win, no-fee basis could not afford to bring “shaky” cases.
“Lawyers who initiate claims they know, or ought to know, are frivolous or without any merit should be liable to pay the other side’s costs, if that’s the finding of the court.
“I hope it will gladden that big heart of yours to know that that is already the law.
“It has been for years,” Gordon wrote in reply.
Gordon told Lawyers Weekly no win, no fee arrangements meant lawyers had a vested interest in ensuring they didn’t bring cases flippantly.
“I think [Bolt] started off with the notion that no win, no fee claims meant that lawyers were bringing frivolous claims and they could do it with financial impunity and I was concerned to point out that there are two fundamental ways in which that’s wrong.
“First, there are laws in every jurisdiction in Australia where if a lawyer brings a claim that he knows is frivolous or vexatious, the lawyer can be directly liable for the legal costs. Second, as lawyers who act in no win, no fee cases know, because you have to do the work on a speculative basis and fund the case yourself, that’s an incentive on the lawyer to make sure the case is not frivolous.”
However, Bolt told Lawyers Weekly he never mentioned cases being frivolous.
“I’m just talking about evening out the playing field, so that those who win against no-win,-no-fee claimants have a reasonable expectation that their costs, if awarded, can and will actually be met.
“But even if Gordon thinks the requirement that lawyers be made responsible for frivolous cases is so useful to address the imbalance I've mentioned, why is this so very rarely used in any circumstances?”
Bolt said he stood by his original article.
“We really are looking at making law firms as rich as [Gordon’s] responsible through whatever means, insurance perhaps, for guaranteeing to pay costs awarded against their clients in no-win, no-fee actions they lose. After all, these are cases where they are rewarded more handsomely if they win.
“As things are, no-win, no-fee cases tend to put the people being sued at an unfair disadvantage, in circumstances where they know that if even they win they lose.
However, Gordon said that without no win, no fee arrangements many ordinary people would be denied access to the justice system given the absence of legal aid for civil disputes.
“If you look at all of the most important legal breakthroughs for ordinary people in the last 30, 40 or 50 years — asbestos victims over James Hardie, women with defective breast implants, or whether it’s for people with medically acquired HIV or victims of religious institution sexual abuse — all have been under a no-win, no-fee basis. If those people were required to pay up front James Hardie, for example, would have got away scot-free. No-one reasonable would consider that to be a just outcome,” Gordon said.