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Lawyers’ Contingency Fees in South Africa: What Does “No Win, No Fee” Mean?

Lawyers’ Contingency Fees in South Africa: What Does “No Win, No Fee” Mean?
Jan 18, 2022 gnuworld
lawyers contingency fees no win no pay

In this article, we offer an explanation of lawyers’ contingency fees in South Africa, including how they work and what a “no win, no fee” arrangement typically involves.

What is a contingency fee?

A contingency fee agreement means that an attorney receives payment only if a claim is decided in a client’s favour.

An attorney represents his or her client for as long as a case takes. The attorney carries the costs of engaging experts, as necessary, without charging an initial fee or the usual hourly rate.

In other words, the attorney’s payment is dependent, or “contingent”, on winning the case. When a case is won, the attorney is paid according to the agreement.

It’s important to note that other costs, aside from an attorney’s fee, are also involved in trying a personal injury claim in South Africa. This article provides a useful overview of the different types of costs that may be involved.

Standard contingency fee in South Africa

Contingency fee agreements are regulated by the Contingency Fees Act (CFA) 66 of 1997.

Under the Contingency Fees Act, a contingency fee agreement can take one of two forms.

The agreement may entitle an attorney to his or her normal fees for services rendered, if the client’s claim is successful. In this case, there’s no statutory cap on the fee amount.

Alternatively, the agreement may entitle the attorney to a success fee, in addition to the norml fee.

By law, the total fee in this case is limited to 25% (VAT inclusive) of the capital sum (damages) recovered or double the lawyer’s normal fees – whichever is the lesser. South African courts have upheld this cap, declaring contingency fee agreements that don’t comply with the Act invalid.

Like any legal fee, a success fee is calculated with reference to work actually done.

Expenses/disbursements are excluded from both fee calculations.

Requirements under the Contingency Fees Act

A contingency fee agreement is only valid if it is in writing, prescribed within the regulations of the CFA and signed by the client and the attorney.

The agreement must state the proceedings to which the agreement relates and, before the agreement was entered into, the client must have:

  • been advised of any other ways of financing the litigation and of their respective implications
  • been informed of the normal rule that in the event of being unsuccessful in the proceedings, he or she may be liable to pay the taxed party and party costs of the opponent
  • been informed that he or she will also be liable to pay the success fee in the event of success
  • understood the meaning of the agreement.

Why contingency fee agreements are generally in the client’s best interests

A contingency fee agreement is usually in the best interests of the client. There are several obvious advantages:

  • No up-front fees. You don’t pay your lawyer upfront or fork out large legal bills while the case is ongoing. This gives people with lower incomes better access to legal assistance.
  • Incentivised attorney. An attorney doesn’t get paid unless the case is won, so you know he or she will be highly motivated to get the best possible result.
  • No costs for a loss. If you don’t win the case, you don’t have to worry about hefty attorney’s fees. You may, though, be responsible for other costs.
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Why we operate on a no win, no fee basis

At DSC Attorneys, we work on a no win, no fee basis because we believe that this gives South Africans greater access to justice. Contingency fee agreements help clients who might otherwise find the costs of pursuing claims prohibitive.

We specialise in handling personal injury claims, to get our clients the compensation they deserve. Contact us for the very best legal support and representation.

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