What percentage do lawyers actually take in No Win/No Fee cases?

12 Mar

When discussing no win/no fee costs agreements clients often ask what percentage their lawyer will charge in the event of a successful outcome in their claim.

In NSW lawyers are not allowed to charge fees calculated as a percentage of the damages recovered by a client.

Instead, a law firm must provide you with an estimate of their likely fees before entering into a cost agreement with you, and to provide updates if that estimate changes.

There is much debate within the legal profession as to the fairest and best means of valuing the cost of legal services.

For many years this was done on the basis of how much time is spent on a matter, but in more recent times there has been a recognition that this should be just one of the considerations to be taken into account. For example, a senior practitioner is likely to be able to assess and prepare a case in less time than a junior lawyer, and although costs agreements typically reflect varying hourly rates to allow for this, it is not the full story.

This is because many tactical decisions have to be made when running a case. These include such matters as how to best present it to the other side, what evidence to rely on, and most importantly, in relation to the settlement of claims. The more senior the lawyer, the better these judgment calls are likely to be.

As these factors are hard to gauge at the start of the case, most law firms still use time recording as the primary basis for charging professional costs.

Although lawyers are not able to charge fees based on the value of the settlement, they are able to charge an uplift fee of up to 25% of the total professional costs where they have a conditional (no win/no fee) costs agreement which provides for this. An uplift fee is to compensate the law firm for the risk involved in acting on a no win/no fee basis where the lawyer is at risk of not being paid at all, or paid a long time after the work has commenced.