The LIV believes that contingency fee arrangements, which are currently prohibited in all Australian states and territories, should be allowed.
Contingency fees would help address the unmet legal need of middle Australians who do not qualify for legal aid and cannot afford to pay legal fees up front, according to the LIV.
“Legal aid resources are severely limited, and face record demand,” LIV president Steven Sapountsis said.
“They are rarely available for civil proceedings, and many people cannot afford to pay legal fees upfront or at all to pursue or defend a civil claim. This includes individuals and owners of small and medium businesses.”
Under a contingency fee arrangement, the law practice charges a percentage of the amount successfully recovered by the client in a dispute, rather than charging an hourly rate. For transactional matters, the client and the law practice agree that if a certain outcome is achieved, the law practice will receive a percentage of a specified factor.
Mr Sapountsis said the LIV believes contingency fee arrangements provide an alternative and transparent billing method for some clients.
"Without contingency fees, many clients can't access justice and so they recover nothing,” he said.
“With contingency fees, clients have the opportunity to pursue their rights and, if successful, pay for their lawyer's services with a percentage of the lump sum award.”
The LIV noted several safeguards that should accompany the introduction of contingency fees, including a cap of 35 per cent on contingency fees in personal injury matters and the exclusion of family law, criminal law or migration law matters from contingency fee arrangements.
Both the Productivity Commission and the Victorian Law Reform Commission have considered contingency fees before.
The Productivity Commission recommended the removal of the prohibition on them subject to certain exceptions and restrictions and the Victorian Law Reform Commission recommended that the prohibition on percentage-based contingency fees be reconsidered.
Mr Sapountsis released a LIV paper on contingency fees to coincide with an Australian Centre for Justice Innovation Civil Justice Conference that was held in Melbourne last week.
The LIV has sent a position paper on percentage-based contingency fees to Victorian Attorney-General Martin Pakula and is preparing a submission to the state government’s Access to Justice Inquiry, due later this month.