The legality of contingent fee arrangements is often subject to restrictions, particularly in relation to contingent legal fees. According to law professor Herbert Kritzer, as of 2004 contingent fees for legal services were allowed in the following countries:
Australia,
Brazil,
Canada, the
Dominican Republic,
France,
Greece,
Ireland,
Japan,
New Zealand, the
United Kingdom and the
United States. They are also allowed in personal injury actions in
Lithuania.
Australia In Australia, conditional fee agreements are permitted under the
Uniform Law, applied in NSW and Victoria by local application Acts. Where a favourable outcome is reached, an additional uplift fee (success fee) of up to 25% of the costs agreed to in the costs agreement may be charged. However, contingency fees based on a percentage of a client's net recovery are banned.
Canada Contingent fee agreements are legal in all provinces of
Canada, but with some restrictions on what cases are eligible to be handled on a contingent fee basis. In some cases, an attorney may collect a percentage of recovery in case of a victory but must otherwise charge an hourly fee.
Russia Contingent fees are not enforceable under the Russian law. They are not defined in law but the Constitutional Court ruled that fees for the services provided can not be contingent on the decisions that might be taken in the future by the government or courts, including the amount of the compensation awarded as a result of a court hearing. For that reason the
European Court of Human Rights does not award legal fees incurred by applicants under a contingency-fee arrangement under the Russian law to applicants in cases against Russia.
South Africa Contingent fees have been allowed in
South Africa since 1997, as discussed by K. G. Druker in "The law of contingency fees in South Africa". Any fees higher than the normal fees of the legal practitioner concerned may not exceed such normal fees by more than 100%. However, in claims sounding in money, the total of any such success fee payable by the client to the legal practitioner may not exceed 25% of the total amount awarded or any amount obtained by the client in consequence of the proceedings concerned, which may not, for the purposes of calculating such excess, include any costs.
South Korea Contingent fees or "success fees" () are a widespread practice in South Korea. Until 2015, they were used in both criminal and civil litigation. In some civil cases, courts have rejected fees exceeding 10% of the award as
unjust enrichment of the attorney, requiring the attorney to refund the excess to the client. On July 23, 2015, the
Supreme Court of Korea ruled that contingent fee agreements for criminal representation were void as against public policy, under Article 103 of the Civil Act of South Korea. The judgment was unanimous, with four justices concurring separately. The decision provoked widespread outcry from criminal defense lawyers, particularly former judges and prosecutors who had been able to charge very high success fees due to clients' belief that their connections could help them win the case.
Turkey Contingency fees, or more generally
conditional fee agreements, are permitted under Turkish Law, but are capped at 25% of the claimed amount in the original complaint.
United Kingdom In the
English legal system, a contingent fee is generally referred to as a
conditional fee agreement (CFA) or, informally by the public and press, as
"no win no fee". The usual form of this agreement is that the
solicitor will take a law case on the understanding that if lost, no payment is made. In the alternative, the client may enter into a fee contract with the lawyer based upon hourly billing with an additional
success fee to be paid in the event of a successful outcome to the litigation. In England, the success fee must be a percentage, no greater than 100% of the contractual hourly fee. This contrasts with the contingency fee in the US, which gives the successful attorney a percentage of the damages recovered by the attorney's client. In 19th century
English law, conditional fees were controversial, especially in the
Swynfen will case, as they were held to offend ancient prohibitions against
champerty and maintenance. However, conditional fees were introduced by the
Courts and Legal Services Act 1990 (section 58), and were recognized by statute in 1995. Initially, the success fee was not recoverable from the losing party, but on 1 April 2000, section 27 of the
Access to Justice Act 1999 amended the Courts and Legal Services Act 1990 to allow recovery of success fees from the losing party. The regulations that accompanied this change in the law (the Conditional Fee Agreements Regulations 2000) were far from clear, and the result was that a great deal of satellite litigation took place. On 1 November 2005, these regulations were revoked, and now it is much easier to enter into conditional fee agreements than before. The chances of having a case accepted on conditional fee are greatly increased if the case is investigated by a legally qualified professional. On 29 March 2011, Justice Secretary
Kenneth Clarke announced plans to reform contingent fee arrangements, as part of reforms to the justice system prompted by a review of civil litigation costs carried out by Lord Justice Jackson. The changes were prompted by large rises in litigation costs and the proliferation of
ambulance chasing advertisements and claim farmers. Following the introduction of contingent fees, the
National Health Service had to pay out hundreds of millions of pounds in compensation for malpractice claims. Under the new arrangements, claimants with contingent fee agreements still do not pay upfront fees or have to cover their lawyers' costs if the case is lost.
United States Most jurisdictions in the United States prohibit working for a contingent fee in
criminal cases or certain types of
family law claims, as made clear in Rule 1.5(d) of the Model Rules of Professional Conduct of the
American Bar Association. Some jurisdictions, however do allow contingent fees in criminal cases. It depends on the attorney, the type of case and the fee agreement. In the United States, contingency fees are standard in
personal injury cases and are less common in other types of litigation. Most jurisdictions require contingent fees to be "reasonable", resulting in a typical contingent fee of 33-45% of any eventual recovery.
Medical malpractice Many states impose additional restrictions on contingent attorney fees in medical malpractice cases. 16 states (California, Connecticut, Delaware, Florida, Illinois, Indiana, Maine, Massachusetts, Michigan, New Jersey, New York, Oklahoma, Tennessee, Utah, Wisconsin, and Wyoming) have regulated contingency fees for medical malpractice cases. Some states cap fees at a flat rate; for example, 33.33% of net judgment or recovery in Tennessee and Utah. Other states utilize a sliding scale fee structure. For example, Connecticut utilizes a sliding scale fee structure but that can be waived in complex cases with a cap of 33.33%. California permits contingency fees in the amount of 40% of the first $50,000 of recovered damages, 33.33% of the next $50,000, 25% of the next $500,000 and 15% of any recovery in excess of $500,000. Florida establishes different fee limits depending on the stage of the case at the time damages are recovered. For example, it allows a higher limit if the case goes to trial and even more if the case is appealed. Four of the states that limit attorney fees (Illinois, Maine, New York, and Wisconsin) explicitly allow a court to authorize a larger fee. Wyoming explicitly allows the client and attorney to contract for a larger fee. Instead of a specific limit or a sliding scale, six states (Hawaii, Iowa, Maryland, Nebraska, New Hampshire, and Washington) require or authorize court approval of the reasonableness of attorney fees under various circumstances. ==See also==