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LIV calls for introduction of contingency fees to increase access to justice

LIV calls for introduction of contingency fees to increase access to justice

By Kerry O'Shea

Advocacy Justice 

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Contingency fee arrangements should be allowed to increase access to justice by people who do not qualify for legal aid and cannot afford to pay legal fees up front, according to the Law Institute of Victoria.

LIV President Steven Sapountsis said allowing contingency fees would go some way to addressing the unmet legal need of “middle Australians”.

“Legal aid resources are severely limited, and face record demand. They are rarely available for civil proceedings, and many people cannot afford to pay legal fees up front or at all to pursue or defend a civil claim. This includes individuals and owners of small and medium businesses,” Mr Sapountsis said.

He released a Law Institute of Victoria paper on contingency fees to co-incide with an Australian Centre for Justice Innovation Civil Justice Conference being held in Melbourne today. Mr Sapountsis was addressing the topic of “Future Litigation Funding Approaches”.

Under a contingency fee arrangement, the law practice charges a percentage of the amount successfully recovered by the client in a dispute , rather than charging an hourly rate. For transactional matters (such as the sale of a business), the client and the law practice agree that, if a certain outcome is achieved, the law practice will receive a percentage of a specified factor (eg the value of the business).

The LIV recommends that contingency fee arrangements be allowed with several important safeguards, including:

  1. A cap of 35% on contingency fees in personal injury matters;
  2. If contingency fees are charged by a law practice, hourly rates cannot also be charged for the same matter;
  3. Contingency fees should not be permitted in family law, criminal law or migration law matters;
  4.  Additional costs disclosure requirements should apply for contingency fee agreements akin to those which apply to conditional fee agreements.

Mr Sapountsis said the LIV believed that contingency fee arrangements provide an alternative and transparent billing method for clients, including commercial clients and those who are not able to access “No Win, No Fee” arrangements.

"Without contingency fees, many clients can't access justice and so they recover nothing. With contingency fees, clients have the opportunity to pursue their rights and, if successful, pay for their lawyer's services with a percentage of the lump sum award."
Under contingency fee arrangements, the law practice and the client share the risk of litigation. Contingency fee arrangements provide an alternative to people who cannot afford to pursue their claims, even though they have merit.

Contingency fees are currently prohibited in all Australian States and Territories. Both the Productivity Commission and the Victorian Law Reform Commission have considered contingency fees. The Productivity Commission recommended the removal of the prohibition on them subject to certain exceptions and restrictions. The Victorian Law Reform Commission recommended that the prohibition on percentage-based contingency fees be re-considered. The LIV developed its position paper through a Contingency Fees Working Group, which included lawyers across a range of practice areas and from both plaintiff and defendant firms.

The LIV has sent its position paper on percentage-based contingency fees to Victorian Attorney-General, Martin Pakula. “Percentage-Based Contingency Fees: Position Paper” is available at www.liv.asn.au/submissions. It will also be included in the LIV submission to the State Government’s Access to Justice Inquiry, due later this month.

 

For further information regarding this media release please contact:
Kerry O'Shea, General Manager, Public Affairs & Legal Policy

T: 03 9607 9373
E: media@liv.asn.au


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