A LEGAL QUESTION IN QUEENSLAND

Q: If I win my court case can my lawyer charge me a percentage of my winnings?

A: Not here in Queensland they can’t. At least not yet

A lawyer’s fee which is calculated as a percentage of the damages awarded in a court case is known as a contingency fee. Because we all watch too much American TV, here in Australia there is sometimes a misconception that contingency fees are de rigueur for lawyers everywhere. But it’s not true. While contingency fees are commonplace in the American legal system, where lawyers are entitled to charge a percentage of their client’s win, and in successful class actions or billionaire property disputes will sometimes walk away with a sizeable chunk of the ultimate award or settlement, that doesn’t happen here in Queensland.

Currently, Australia has a national prohibition on law practices charging contingency fees. There is a qualified exception to that prohibition in Victoria, in that, since July 2020, the Victorian Supreme Court has had the power to permit contingency fees to be paid to lawyers representing group members of a class-action in certain prescribed circumstances. But the contingency fee is not available as a right, and will only be allowed where the court can be satisfied that it is “appropriate or necessary to ensure that justice is done in the proceeding.” So far, there have been relatively few such orders made, even in Victoria, although the legislation there may be a portent of things to follow in Australian courts around the country.

Nevertheless, for now, at least, the concept of contingency remains highly controversial in this country. The idea of lawyers charging a percentage of a plaintiff’s windfall is still anathema to many lawyers who believe that giving lawyers a direct financial stake in the outcome of their client’s cases would potentially create some very serious ethical conflicts and compromises.

I recently read about a major class action case in the States where, after many years of litigating, the plaintiffs agreed to accept a settlement offer in the vicinity of several hundred million US dollars, which was a mere drop in the bucket compared to the several billions they had claimed against the defendants. Not surprisingly, some of the individual plaintiffs had a lingering reluctance to accept the settlement sum being offered, given their expectations of what a potential judgement award might look like, not to mention the years of blood, sweat and tears they had poured into the case. But, almost certainly, their lawyers would have welcomed the early offer of settlement, as they stood to pocket more than a third of the multi-hundred-million-dollar outcome for themselves, by way of their contingency, without even having to endure the effort, cost and risk of a defended trial. Ultimately the Judge presiding over the matter declined to sanction the proposed settlement on the basis that, in the judge’s view, the settlement sum was insufficient, with regard to the strength of the Plaintiffs’ case and the potential damages involved. His Honour listed the matter for trial.

I’m not suggesting the proposed settlement was or was not a good deal for the plaintiffs, but it’s easy to see how at least the prospect of a significant conflict of interest for their lawyers could arise in such a case, where the lawyers are in every sense vested partners in the outcome of the litigation.

Anyway, for now at least, you can rest easy. Contingency fees are out of bounds for lawyers in this state. The only thing your lawyers are entitled to is payment for the long hours and effort they put into the case on your behalf.

Brendan Nyst- Dispute Resolution & Litigation, Wills & Estates, Defamation, Nyst Legal www.nystlegal.com.au