What Does No Win No Fee Cost Arrangement Actually Mean?

Most people in Canberra will be familiar with personal injury advertisements on the radio, in the Canberra Times, or on TV before and during Kung Fu Panda 4. They usually promise to recover compensation without you having to dip into your pocket.

This blog looks at the reality of many arrangements spruiked as “no win no fee”.

No win, no fee cost agreements or speculative cost agreements can be very important tools to secure client’s access to justice. Few people have the resources to fund any large litigation. When people are injured, their ability to work is often impaired, and their income is the first thing to disappear or be reduced.

Cost agreements

A no win, no fee cost agreement only allows a solicitor to charge a client at the end of the matter. A solicitor’s ability to charge fees depends on the “successful outcome” of the claim. If the claim settles (which happens in most claims) or judgment is entered at the end of a hearing, a solicitor is entitled to recover fees.

With most, but not all, matters taken on a no-win, no-fee arrangement, solicitors will only take the case if liability is not an issue. That is – they won’t lose. A settlement will happen, or the case will be won – so it cannot be argued that the result was not a “win”. This can often leave clients with difficult cases where the liability to pay any money is contested in the cold.

It is important to remember that if you lose the claim, you may have to pay the defendants’ costs (which is mostly an issuer).

A no win, no fee cost agreement must be in writing and signed by the client. A solicitor cannot act on the arrangement with a handshake and a kind word. The need to record no win no fee arrangements in writing is very important, because solicitors are in a position of trust and power relative to their clients, who rely on them for advice, and because cost agreements control the way fees can be charged.

Cost disclosure

Just because a no win, no fee cost agreement is in place, a solicitor is still bound to meet the obligations to their client for any billing. The most important obligation is cost disclosure. Solicitors are obligated to tell clients how much litigation will likely cost. A client is entitled to that information because, without it, they cannot make informed decisions about the litigation, and, at the end of the matter, they have to pay the costs.

If a solicitor fails to inform a client about their costs, the client is not required to pay until a court has reviewed the bill.

The invoice

At the end of a matter, when settlement is reached or judgment entered, the solicitor must give the client a bill or invoice. If the client agrees to pay the invoice, the costs can be withdrawn from the solicitor’s trust account. The invoice is important because it is the client’s first opportunity to assess whether the cost charged is reasonable. Ask for itemisation.

Some firms only provide a lump sum invoice (simply stating the amount payable). Every client is entitled to request an itemised invoice that shows exactly how the figure was arrived at. The entitlement to an itemised invoice allows clients to scrutinise the costs charged.

We regularly act for people who have been injured at work, by institutions, or even at the hands of medical providers. We use no-win, no-fee cost agreements for almost all of those matters. It is important that our clients can trust us to act for them.

Whilst most solicitors do the right thing by their clients and with their billing, there are a few red flags every client should watch out for, as follows:

The solicitor did not provide a written cost agreement.
The solicitor gave a rough cost estimate at the first conference and never updated it or only updated it at the very end.
The solicitor provided a lump sum invoice with no specification or itemisation.
When asked about costs, the solicitor avoids giving an itemised invoice.
The solicitor either charged a round figure for costs or reduced costs immediately when challenged.

You are always entitled to seek advice about your solicitors’ costs. If you have retained a solicitor to act for you in a personal injury matter, you can seek another experienced personal injury lawyer or solicitor to review the costs (confidentially). You can do that even if the matter has been settled and the invoice has been paid.

If you need advice regarding costs or a personal injury matter, contact our team of highly experienced personal injury lawyers at info@aulich.com.au.

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What Does No Win No Fee Cost Arrangement Actually Mean?