The Legal Services Commissioner has released a new guide outlining what he sees as the pitfalls of no win, no fee agreements.
Legal Services Commissioner John Briton said that while no win, no fee cost agreements can make it easier to obtain legal representation, there are also potential pitfalls for would-be litigants.
"The new guide provides practical information on how these agreements work, what costs they cover and, more importantly, what costs are not covered," Briton said.
No win, no fee arrangements assist litigants - primarily in the personal injuries space - who can't afford to pay their legal costs up front or as they go. The conditional cost agreements mean law firms will not charge any fees for their services unless the client wins the case.
"Solicitors most commonly offer no win, no fee agreements for personal injury cases where a potential claim for compensation is anticipated," said Briton.
"The solicitor's fees and costs can then be paid from the final settlement at the end of the matter. However, even when no win, no fee cases fail, solicitors might still be entitled to recover their outlays in pursuing the claims, such as court filing fees, the cost of expert reports and barristers' fees. The client could also have to pay the other side's legal costs if the claim fails.
Rod Hodgson, the Queensland managing principal of Maurice Blackburn, told Lawyers Weekly the firm welcomes the guide, which he said "highlights the availability of no win, no charge arrangements, because without plaintiff lawyers offering such arrangements, access to justice would be unaffordable for many people who are the victims of wrongdoing".
"Law firms that offer no win, no charge are now essentially legal aid for injured people - given that there is no funding via legal aid for injured people. Anything that makes it easier for people to understand what's involved has to be a good thing," he said.
According to Briton, the potential liability under such agreements can be considerable and should be weighed carefully. "There is no such thing as a guaranteed win in law," he said.
Hodgson said the guide does what any good lawyer should do.
"The guidelines assist clients to ensure that costs arrangements with lawyers are transparent," he said. "They do no more than what a competent lawyer should do: explain clearly the basis of the retainer, and that all forms of litigation entail some risks to be evaluated and balanced against their own financial circumstances."
The consumer guide is published online by the Legal Services Commission Queensland.