Contingency fees can compromise ethical obligations, Law Council says

The council's board of directors will oppose the fees as a matter of principal

Contingency fees can compromise ethical obligations, Law Council says

Contingency fees will compromise the fundamental ethical obligations of lawyers to the court and to their clients, the Law Council of Australia has said.

The council’s board of directors has resolved to oppose contingency fees as a matter of principle, the peak legal body said. At the meeting, the board agreed that contingency fees cannot be introduced without jeopardising the interest of litigants and the ethical duties of lawyers.

The statement comes after the Victorian Legislative Assembly approved last month the Justice Legislation Miscellaneous Amendments Bill 2019. The bill, which is now before the Victorian Legislative Council, will allow plaintiff lawyers to claim a percentage of the amount recovered in a successful group claim as their costs payable in proceedings, the Law Council said.

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“I am a passionate advocate of promoting access to justice, but I do not accept that contingency fees will promote that objective,” said Pauline Wright, Law Council president. “Should any government in Australia propose any contingency fee arrangements, the Law Council will have to carefully consider that proposal as against all the legal profession’s fundamental obligations.”

The Law Council’s board said that the proposed model runs the risk of creating a conflict of interest between the lawyer and the client. It would require lawyers to run the risk of adverse costs orders and security for costs, the body said.

Wright said that the “no win-no fee” arrangement available in most Australian jurisdictions already enables civil claims to be taken on for clients despite a lack of resources, or in cases that merit litigation due to public interest.

“Public interest cases would not benefit from the introduction of percentage-based fee agreements, and neither would low-income matters,” Wright said. “Percentage-based fee agreements would only benefit large law firms that are already billing via conditional fee arrangements – generating a higher premium with no commensurate increase in risk.”

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