The ACT is to have a no-win, no-fee system soon, the president of the Law Society, Robert Clynes, said yesterday.
The system would enable people who otherwise could not afford it to pursue a legal action.
Mr Clynes said the society had agreed to the system. It did not require legislation, just a change to the profession’s rules of conduct. It would not apply to criminal or family law.
The system would enable lawyers to charge an amount on top of the normal fee if the client won the case, he said. This was for taking the risk of a loss, in which case the lawyer would not get paid, and in lieu of interest.
This is called an uplift fee. Present rules prevent the charging of an uplift fee.
Mr Clynes’s statement comes after a Melbourne firm, Slater and Gordon, announced it was taking cases on a no-win, no-fee basis. However, it would not be able to charge an uplift fee.
Mr Clynes said the ACT would permit an uplift fee of up to 100 per cent of the scale fee set by the court. It would not be the American system of the lawyer taking a percentage of the winnings.
The details of how the system applied to out-of-pocket costs associated with a case had yet to be worked out. These costs were things like doctors’ reports in personal-injury cases and other costs associated with getting evidence together.
Mr Clynes said it was likely to be a matter worked out between the lawyer and client.
Legal sources say that the ACT has long had a kind of no-win, no-fee system. Lawyers out of a sense of community obligation have frequently run cases with this implicit understanding where people cannot afford to pay up-front. Many work- and car-injuries cases are run without the injured person paying anything before the case is finalised and usually if the injured person has little money the lawyer is hard-pushed to get paid in the case of a loss.
The High Court ruled in 1960 that no-win, no-fee arrangements did not offend legal ethics.
The system was recommended in the Access to Justice report to the Federal Government earlier this year. It recommended against the American system, but in favour of uplift fees, saying they would give access to justice at present denied to some. It recommended full disclosure and explanations be given to clients.
It said the argument that lawyers might settle cases to ensure they got their fees assumed that lawyers were more risk averse than their clients. Rather, it pointed out, there were great advantages to clients in having lawyers’ and clients’ interests more closely aligned than when lawyers get paid in any event.
The Melbourne firm said many people could not take up their rights because they were fearful of high fees.
Mr Clynes, however, said the ACT experience was different. His experience, confirmed by other lawyers, was that people with good case in personal injuries cases did not miss out becuase they could not afford up-front fees.
Legal sources said the practice had not been widely known because of earlier rules about advertising.