A ‘no win – no fee’ agreement is generally used where a client has limited finances to pay for legal services, and where a lawyer believes there is a realistic chance of winning the case. They are also known as ‘conditional costs agreements’.
In a ‘no win – no’ fee agreement, your lawyer agrees that you only need to pay their legal costs if you ‘win’ your case. Not all lawyers offer ‘no win – no fee’ agreements to their clients.
This type of agreement is a legal binding contract.
Carefully read the terms before you sign a ‘no win – no fee’ agreement.
Common expenses you might need to pay
Your lawyer can recover ‘disbursements’. These include the cost of court filing fees, expert reports or barrister’s fees that are part of your case. Your lawyer must include an estimate of these costs in your agreement if you need to pay them.
Your lawyer may charge higher fees for their services than if you paid their fees upfront or by instalment. This is because your lawyer is taking a risk that if they don’t win your case, they may not be paid for their work. This is known as an uplift fee and is only payable to your lawyer if they win your case. Any uplift fee should be included in your agreement. It can be a dollar amount payable, or a percentage of the fees you would have paid for your lawyer’s services if you paid them directly for their services. The maximum uplift that can be charged is 25% of the legal fees charged (not a percentage of what was paid to you by the other side).
Other party's costs
If you don’t win the legal case, you may still need to pay part of the other party’s legal costs. Ask your lawyer how much money this could cost you if the legal case goes to Court and you don’t win.
Common questions and answers
They are mostly used in personal injury claims, estate claims, employment disputes and class actions. They can apply in other kinds of matters where there is likely to be money available to pay the costs after the matter is settled. A ‘no win – no fee’ agreement can’t be used in criminal proceedings or a Family Law matter.
The agreement must be in writing, and you must sign it for it to be valid. It must include terms set out below. Ask your lawyer to explain these to you if you are not sure what they mean.
1. An estimate of total legal costs
Your lawyer must estimate your total legal costs, which will include:
- their fees for their work, including details of how those costs are calculated and when and how they are payable. Lawyers can charge hourly rates, or a fixed-fee (at each stage of the matter) or use a Court scale.
- the disbursements (outgoing payments) which might include fees for barristers, medical reports, photocopying and so on.
- if an uplift fee (see below) is payable, the basis on which it is payable and the estimated amount payable. This can be up to 25% of the lawyer’s fees otherwise payable.
Ask your lawyer more about the costs in your case. If your matter is resolved by agreement with the other party quite early, your fees should be considerably lower than the initial estimate. It is not common for a matter where there is a ‘no win – no fee’ agreement to go to Court.
Your agreement must include a cooling-off period of at least five business days. During this time, you can end the agreement if you change your mind or decide to engage another lawyer. To end the agreement, you must write to your lawyer within the cooling-off period.
Be aware that your lawyer may still charge you for any work they performed before you ended the agreement. It’s a good idea to keep a copy of any communications you send to your lawyer.
3.Definition of a ‘win’ (or successful outcome)
‘No win – no fee’ agreements must set out the circumstances that form a ‘win’ in your matter. An agreement will usually refer to a ‘win’ as a ‘successful outcome’. When one of these conditions is met, your lawyer is then able to charge you their legal fees.
A win could mean many different things under the agreement.Common examples are:
It is important to understand that a lawyer is entitled to charge you their legal fees under certain other circumstances where you do not win your case, such as if you drop the case or change lawyers before the matter has concluded.
The agreement must also include a statement that you have been informed of your right to receive independent legal advice before signing the agreement.
A ‘no win – no fee’ agreement must be made in writing, and in language that is easy for you to understand. You must sign it before it becomes a legal contract with your lawyer. It’s important that you carefully check and understand the wording of your agreement before you sign.
Sometimes the costs of preparing the litigation can be very high, including expert reports and other outlays that may be necessary. Many law firms do not have the resources to pay these costs in advance, particularly where the matter is ‘no-win – no-fee'. To fund these costs, a lawyer may engage a litigation lender to advance these expenses. The lender is paid back out of the proceeds of settlement, along with interest on the monies advanced. You should ask your lawyer to explain the terms of the loan to you.
An arrangement where the lawyer takes a percentage of the client’s payout is known as a ‘contingency fee’. While this is a common arrangement in the United States, it is illegal in Victoria in all litigious matters (court disputes) except in certain class actions, where the arrangement must be approved by the Court.
If you win, you will need to pay:
a. the lawyer’s fees as calculated under the agreement. This may include an uplift fee. An uplift fee is like a success fee and can be an amount of up to 25% of the lawyer’s fees.
b. the disbursements (outgoing payments to third parties who provide services required for your matter, including barristers, medical reports and copying costs).
c. if a litigation lender is involved, you will need to pay them back, along with interest as provided in the loan agreement.
d. in some personal injury matters, you may have received weekly benefits that will need to be paid back.
The good news is that, in some cases, where you win, the other party to the litigation will agree, or be ordered, to pay some of your expenses and legal fees. You should ask the lawyer whether this is likely in your case.
If you are unhappy with the advice to settle, you may wish to get a second opinion from another lawyer with expertise in the area. Bear in mind that this will be an additional expense to you.
As for costs, lawyers must not charge more than fair and reasonable amounts for legal costs. What is considered fair and reasonable depends on a range of factors including; how urgent the work is, the number of documents involved, the instructions given in the matter, how much skill and expertise is required, how complex the matter is and how much time is spent on the matter. For more information, see Legal Costs and Billing. In the first instance, you can express your concerns to the lawyer and see if you can negotiate a reduction. You can also make a complaint or lodge a claim with the Costs Court.
Even if you don’t need to pay your own lawyer, you may still be out of pocket if you don’t win the case. Ask your lawyer about the costs you will need to pay if you are not successful.
The other side’s legal costs
If you lose your case, sometimes you must pay a proportion of the other side’s legal costs.
Your lawyer can charge you for the disbursements paid on your behalf.
You can search our register of lawyers. It lists all Victorian lawyers and law practices that offer legal services. It includes information about their special areas of interest, and other languages spoken.
We encourage you to shop around to find the right lawyer for your circumstances.
In some cases there will be other things to consider
Some of your costs may be paid by the losing party
It is common especially in personal injury matters for the other side to pay part of your legal costs. Lawyers from both sides will discuss how much is payable as part of the settlement. This is usually done on what is known as a ‘party and party’ basis (usually 60-75% of your fees) or, less commonly, a ‘solicitor and client’ basis (which may be closer to 80-90% of your solicitor’s actual costs).
Where medical and other expert reports are needed as part of your case, a litigation lender may become involved. A litigation lender provides finance to the lawyer to pay for the disbursements (or outgoings) during your case, and you repay the lender with interest and/or a premium.
If you are part of a class action, the Court may permit your lawyer to charge a contingency fee. Your lawyer should provide information to you before this happens and tell you how the amount of the fee will affect the compensation you are paid at the end of the matter.