No win no fee in Australia: conditional costs agreements, uplift fees and the contingency ban

"No win no fee" in Australia means a conditional costs agreement: you pay the lawyer's professional fees only if the agreed "successful outcome" happens. If you win, the firm may add an uplift fee of up to 25% of its professional fees (excluding disbursements) in litigation. What a lawyer generally cannot do is take a percentage of your damages: contingency fees are banned, except where the Supreme Court of Victoria makes a group costs order in a class action. Even with no win no fee, you can still owe disbursements and, if you lose in court, the other side's costs, unless the agreement says the firm will cover them.

This guide is part of the overview of lawyer fees in Australia. Figures are illustrative.

How a conditional costs agreement works

1. The firm assesses your claim and offers a conditional costs agreement.
2. The agreement defines the successful outcome, for example "any settlement or judgment in your favour" or "recovery of more than $X".
3. The firm records its time at normal hourly rates (or agreed fees) as the matter runs.
4. If the outcome is achieved, you pay those fees, any uplift, and disbursements, usually from the settlement.
5. If it is not achieved, you pay no professional fees, but you may still owe disbursements and adverse costs depending on the agreement.

Under the Uniform Law and the Queensland Act, a conditional costs agreement must be in writing, in clear language, signed by you, and include a cooling-off period of at least five business days. Conditional agreements cannot be used for criminal proceedings or matters under the Family Law Act 1975.

Uplift fees: the 25% limit

An uplift fee is an extra amount on top of normal fees, payable only on success, to reward the firm for carrying the risk. In litigious matters it must not exceed 25% of the legal costs, excluding disbursements, that would otherwise be payable. The firm must explain why an uplift is warranted and the basis of calculation.

Worked example (illustrative):

• Professional fees recorded on the file: $36,000 (ex GST)
• Uplift at 25%: $36,000 x 0.25 = $9,000
• Professional fees plus uplift: $45,000
• GST at 10%: $4,500
• Total professional fees payable: $49,500

The uplift applies to $36,000, not to the settlement. If the settlement is $200,000, the uplift is still $9,000, not $50,000. That is the key difference from a contingency fee.

Why percentage contingency fees are banned

A contingency fee is a fee calculated as a share of what you recover, such as "30% of your damages". Australian legal profession laws prohibit law practices from charging fees calculated by reference to the amount of an award or settlement in litigation. The exception is the group costs order under section 33ZDA of the Supreme Court Act 1986 (Vic), in place since 1 July 2020, which lets the Supreme Court of Victoria order that lawyers in a class action be paid a percentage of the amount recovered. If such an order is made, the lawyers must generally cover adverse costs and security for costs. It applies only in that court and only by order.

What you may still pay if you lose

See adverse costs and security for costs for how losing costs are calculated.

Personal injury caps

Some states add limits for personal injury claims:

• Queensland: section 347 of the Legal Profession Act 2007 sets a maximum for claim-related costs in a speculative personal injury claim, calculated from what you are entitled to after refunds and disbursements; it is widely known as the 50/50 rule. A firm can apply for approval to charge more.
• New South Wales: in personal injury damages claims where the amount recovered is $100,000 or less, costs are generally capped, commonly described as 20% of the amount recovered or $10,000, whichever is greater, with exceptions. Check the current rule with the NSW Office of the Legal Services Commissioner.
• Statutory schemes: workers compensation and motor accident schemes have their own costs rules, and in some schemes the injured person does not pay their lawyer directly.

Worked take-home example (illustrative)

A $180,000 settlement. Fees $49,500 as above; disbursements $14,000; Medicare refund $4,200.

Take-home = $180,000 - $49,500 - $14,000 - $4,200 = $112,300.

Run your numbers in the settlement take-home calculator and read the full settlement take-home worked example.

Questions to ask before signing

• How exactly do you define a "successful outcome"? What if I accept a small offer?
• What uplift percentage applies, and why?
• Who pays disbursements if the claim fails? Do you fund them as we go?
• Will you indemnify me against adverse costs, or is there insurance?
• What do I owe if I change lawyers or stop the claim?
• What is your estimate of total costs, and of my net amount at likely settlement values?

Frequently asked questions

Can I change lawyers during a no win no fee claim?

Usually yes, but the first firm will normally have a claim for its costs, often payable at the end of the case from the settlement. The new firm will usually deal with it.

Is "no win no fee" the same as "no win no charge"?

Not always. Some firms use "no win no charge" to signal that disbursements are also waived. Rely on the written agreement, not the slogan.

Can a no win no fee lawyer refuse to keep going?

Agreements usually allow the firm to end the retainer in defined circumstances, such as you rejecting advice to accept a reasonable offer. Read that clause carefully.

Sources

• Victorian Legal Services Board + Commissioner — no win no fee agreements, uplift limit and cooling-off period
• Legal Services Commission (Queensland) — costs disclosure and uplift fees in Queensland
• Office of the Legal Services Commissioner (NSW) — conditional costs agreements and personal injury costs in NSW
• Supreme Court of Victoria — group costs orders in class actions