5 things to be aware of when considering a No Win - No Fee Agreement?

You have most likely heard of a “NO WIN – NO FEE” agreement but what exactly does this mean? And are there reasons to be sceptical?

In New South Wales, law firms can offer a No Win – No Fee ("NWNF") agreement to clients in the area of personal injury claims.

In simple terms, a NWNF Agreement is a costs agreement whereby you will only pay legal costs to your lawyer if your matter is successful. It allows you to obtain access to legal advice and representation without the requirement to pay your costs up front or as the matter progresses.

Like any costs agreement however, you need to thoroughly read through the agreement and understand the terms. There are some key factors to be aware of:-

1.         A NWNF agreement is only with respect to the legal costs of your own solicitor and firm. They do not apply to the other side’s legal costs if you were to lose your matter and the Court ordered you to pay the other side’s costs. In practice, it is rare to reach this point and you would have had to reject any and all offers of settlement and run the matter through to a Court finding. Nonetheless, it is a risk you need to be aware of and have explained to you from your lawyer.

2.         In offering you a NWNF agreement, understand that your lawyer must consider that the matter has prospects of success. The lawyer and firm is taking the risk that if your matter is not successful, they will not be paid for their services.

3.         Whilst a NWNF agreement will state legal costs are to be paid upon successful completion of the matter, disbursements are considered separate to the professional fees of your lawyer. Disbursements include items such as a Court filing fee, medical report fees or barrister’s fees. It is important to know whether you will be required to met the cost of disbursements up front or whether these costs will be covered by the firm and if the latter, what would happen to these costs if you do not win the case. Some firms do offer litigation funding to assist meeting the cost of disbursements and any such agreement should be explained in detail to you before taking up such an offer.

4.         If a lawyer is offering a NWNF agreement, they are obligated to provide an estimate of their fees at the beginning of the matter and when offering the agreement to you. If the estimate changes materially through the running of the matter, they are obligated to provide an update to you of any change to the estimate.

5.         There are different structures subject to the type of personal injury matter you have. For example, if you are an injured NSW worker, your lawyer can apply on your behalf for a grant from the government to fund your matter. If you are injured in a motor vehicle accident, the costing structure is heavily regulated by NSW legislation. Your lawyer should offer you a NWNF agreement which is specific to the nature of your injury and in line with the cost regulations for that area.

It is important that you know your rights and fully understand the terms and conditions. NWNF agreements are not something to be fearful of. They serve a purpose in allowing everyone a chance to access legal advice irrespective of their financial resources. Your lawyer should take the time to sit down with you and explain any NWNF agreement to you and be fully transparent with respect to their legal costs.