No win no fee… nothing to lose?
Just about everyone who brings an injury compensation claim in Queensland these days is legally represented on what lawyers term a “speculative basis”, meaning they only pay their lawyers if their claim is successful. In the wider community, this is known as “no win no fee” and rarely do four short simple words incite such polarised views.
Depending on who you ask, “no win no fee” is either the saviour of the poor and downtrodden, being the only way that many deserving people could possibly access the justice they deserve, or it’s a blatant encouragement by grubby ambulance-chasers to every opportunist and nuisance out there to have a free hit at easy money they most certainly don’t deserve - after all, what have they got to lose by having a crack?
As always when opinion is sharply divided and emotions run high on a particular subject, the facts get lost in the rhetoric and are never quite as straightforward as either side’s advocates would have you believe.
Love them or loathe them, “no win no fee” injury compensation claims are a fact of life. Whilst this article probably won’t change how you feel at a visceral level about them, it will hopefully at least clear up some of the misconceptions which abound.
One thing that is undeniably true is that “no win no fee” enables some claims to be brought which might not otherwise have been. The harsh economic reality is that lawyers’ fees are high, and most people simply couldn’t afford to pay on an up-front or pay-as-you-go basis, regardless of whether their case is good, bad or indifferent.
If you’re the small business or property owner in the wrong place at the wrong time who is being harassed with a completely baseless and vexatious claim, this might not seem like such a bad thing - without “no win no fee” you realistically wouldn’t have to worry about the claim in the first place.
If on the other hand you’re struggling to keep up with your mortgage and your wheelchair-bound child needs around-the-clock paid care for life due to a car accident you might feel a bit differently.
As with life generally, you’re going to get a mix of the good with the bad - “no win no fee” will enable both the desperately deserving claims and the infuriatingly undeserving ones. So what sort of filter exists to allow the good and prevent the bad?
Over the last 20 years I’ve acted for many injured people bringing compensation claims against insurers, and also for several major insurers (and uninsured private people) defending them against injury compensation claims. Whilst I’ve definitely seen the full spectrum when it comes to the merits of claims, I’ve also noticed two aspects of “no win no fee” which tend to act as a natural “quality filter”.
The first factor involves de-bunking the myth that “no win no fee” automatically means the person claiming has absolutely nothing to lose. Whilst a “no win no fee” arrangement with your lawyers means you don’t have to pay for the work they’ve done if you lose, what about the other side’s legal costs?
Courts generally observe the practice that “costs follow the event” meaning that whoever wins can get their legal costs paid for them by the losing party. I have personally acted for insurers in several matters where the injured person has lost at trial and ended up being ordered to pay the insurer’s legal costs – in all cases these exceeded sixty thousand dollars, and in one of them the injured person’s family home was the only asset realistically available to satisfy the costs order.
Lawyers can find themselves in a great deal of trouble if they haven’t properly warned their clients before exposing them to this sort of risk, and no competent injury compensation lawyer would let their client believe they had nothing to lose.
The second factor is something that will come as no surprise to anyone, and that is lawyers generally prefer not to spend time and resources on a case for which they won’t ever be paid. Whilst the more community-minded of us are happy to do our fair share of pro bono work, losing injury compensation claims isn’t exactly what we have in mind!
A person with a blatantly hopeless case, or who is an obvious fraud, will therefore have difficulty obtaining legal representation. Bear in mind that injury compensation claims generally involve at least 12 months’ worth of work and the payment by the lawyer of thousands of dollars in out-of-pocket expenses (medico-legal reports, search fees etc) along the way. Every time an injury compensation lawyer agrees to represent an injured person on a “no win no fee” basis, the lawyer is effectively investing his or her own money in that person’s case.
As with every investment, you take a risk in the hope of a return - successful injury compensation lawyers are those who know which investment opportunities to seize and which to pass up.
It could be argued, therefore, that “no win no fee” actually makes lawyers more careful about which cases they take on. If the lawyer was guaranteed payment regardless of the outcome, there might be a temptation to tell an injured person what they want to hear just to get their business. With “no win no fee”, however, there’s no point - succumbing to that temptation would only result in a loss of the lawyer’s investment.
This all assumes the lawyer has the skill and experience to make the right investment, or that their potential client has been entirely open and honest with them about some potential weakness in the case. This of course doesn’t always happen and these human factors mean the system remains imperfect. There are still some very poor cases being run by lawyers on a “no win no fee” basis and this does nobody any good at all.
So when all’s said and done, is the “no win no fee” system a good thing or a bad thing?
At the risk of sounding just like a lawyer I’ll answer that question by saying “it depends”. As with the injury compensation system generally, “no win no fee” can do a lot of good for the deserving and it can be abused by the undeserving. Talk to Hughes & Lewis Legal if you want to know more about how it can do a lot of good for you.
About the author
Jason Lewis is a Director of Hughes and Lewis Legal