Currently Victorian lawyers do not receive ‘success’ fees, despite the Law Institute of Victoria (LIV) proposing this form of remuneration for Victorian lawyers. A change in payment for legal advice could result in more lawsuits – this is the style of remuneration found in American courts, which could be construed as a conflict of interest since the lawyer benefits from the outcome.
The move could increase class actions and increase litigation against corporations, but conversely, it could also improve access to legal services for those who can’t afford a lawyer. Contingency fees, as they are called, are being considered across Australia by Attorney Generals’ of the various states, with the Productivity Commission recommending a lifting on the contingency fee ban.
What are contingency fees?
Lawyers would charge a percentage of the amount a plaintiff would win in a case, rather than charging by the hour. This helps those who can’t afford to pay legal fees upfront, and opens up some alternatives for getting paid that don’t currently exist.
Access to legal aid is not that easy, particularly for civil cases. It also opens up ‘no win, no fee’ cases, and motivates lawyers to get a solid outcome for their client – on both sides. There are laws in place in Victoria and New South Wales to keep legal fees in check.
Defendant lawyers don’t like it, and are staunchly opposed to the idea. Lawyers would then also have the incentive to fund their own lawsuits, with cases holding very little merit being pursued for the simple reason of money, which promotes a US-style legal system. We all know what that looks like, and while we make fun of it now, we could end up like that if this proposal is allowed through. This becomes a conflict of interest when the lawyer suddenly sits to benefit with a lot of money, rather than their usual fees. This makes the lawyer’s interests competing with their clients’.
Ways to circumvent this, LIV says, could be to apply caps to lawyers’ earnings from these types of cases, particularly personal injury, at a percentage, and keep a ban in place for family, criminal, and migration cases.
Canada and the United Kingdom have both recently introduced contingency fees, and as Law Society of NSW’s president Gary Ulman says on the move, ‘the world had not come to an end’.
Risk sharing isn’t the worst idea in the world, and making legal services more accessible to those on low incomes counts for something. The debate continues.
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