When you first engage a lawyer, you will be provided with a Retainer Agreement, also known as a Cost Agreement. This document outlines the terms under which the lawyer will represent you.
In South Australia, the Legal Practitioners Act 1981 specifies the required contents of Retainer Agreement, including:
- how the legal fees will be calculated and invoiced;
- the right to receive an itemised invoice;
- an estimate of the total legal fees;
- the range of legal fees that may be recovered from the Respondent if the claim is successful;
- the range of legal fees that the client may be ordered to pay if unsuccessful;
- the avenues for disputing legal fees.
In personal injury matters, there are two types of Retainer Agreements: a standard Retainer Agreement and a 'no win, no fee' Retainer Agreement.
Standard Retainer Agreement
Under a standard Retainer Agreement, the client is responsible for paying their legal fees regardless of the case's outcome.
However, most standard Retainer Agreements for personal injury matters include a term stating that the lawyer will wait until the case concludes before invoicing for their fees. This means the client doesn't need to make payments towards their legal fees throughout the claim.
While the lawyer may wait until the case concludes to invoice for their fees, they may require the client to cover disbursements during the claim. Disbursements are out of pocket expenses on the client's behalf such as postage, printing, photocopying, expert reports, court filing fees and barrister's fees.
No win, no fee Retainer Agreement
Under a no win, no fee Retainer Agreement, the client is only responsible for paying their legal fees if the case is successful (if they win).
Similar to most standard Retainer Agreements for personal injury cases, a 'no win, no fee' Retainer Agreement typically includes a provision that specifies:
- that the lawyer will wait until the conclusion of the matter before they render an invoice for their fees;
- the client may be required to pay disbursements during their claim.
Uplift fees
While 'no win, no fee' Retainer Agreements may seem appealing, clients should be aware that these agreements include an uplift fee and that they will be liable for disbursements regardless of their case outcome.
In South Australia, lawyers can charge an uplift fee of up to 25% of their legal fees under a 'no win, no fee' agreement. For example, if a client's legal fees are $20,000, the lawyer is entitled to charge an uplift fee of $5,000 if the claim is successful. Consequently, the total amount would be $25,000.
Whilst the Respondent will usually contribute towards your legal fees upon the successful resolution of your matter, they do not cover the uplift fee, therefore the fee will need to be paid from the settlement sum that the client receives.
Additionally, clients sometimes may not realise that even if their claim is unsuccessful and they are not required to pay their own legal fees, they still may be responsible for contributing towards to Respondent's costs and disbursements. This amount can be substantial.
Which Retainer Agreement is right for you?
When entering into a Retainer Agreement with a lawyer, it is crucial to thoroughly understand its contents and terms. If you have any questions about the agreement, seek clarification from your lawyer before signing, or consider obtaining independent legal advice.
In matters where liability is uncertain, 'no win, no fee' Retainer Agreements can be appealing because they offer clients with some assurance that they will not be responsible for legal fees if their matter is unsuccessful. However, clients should be aware that they will still be liable for disbursements and, potentially, for the Respondent's legal fees and disbursements.
If liability is clear or unlikely to be an issue, standard Retainer Agreements are often preferable. This is because they avoid the uplift fee associated with 'no win, no fee' arrangements when the risk of losing is minimal. Additionally, clients should note that lawyers are only permitted to offer 'no win, no fee' Retainer Agreements with an uplift fee when there is a significant risk of the claim failing and the client potentially having to cover their own costs.
How can we help?
For personalised advice on which Retainer Agreement best suits your situation, contact us today to discuss your options and ensure you make an informed decision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.