Contingency Fee Agreement Explained

  • In terms of the Contingency Fees Act 66 of 1997 (“the Act”) a client can choose to enter into a Contingency Fee Agreement with his/her attorney and/or advocate.
  • Should the client not want to enter into a Contingency Fee Agreement, his/her attorney will have him/her sign a Fee Agreement in terms of which the client will be liable to pay the attorney’s attorney and own client fees (“normal fees”). Normal fees are those fees normally charged by an attorney/advocate to do legal work for a client.  The client may finance his/her litigation themselves or approach Legal Aid South Africa if he/she cannot afford litigation (only clients who qualify for legal aid may apply).
  • In the case of a Contingency Fee Agreement: if the client wins his case, the attorney will be entitled to a portion of the amount that the client has won.
  • In terms of the Act, a contingency fee will be 25% of the amount awarded to a client in a court case, if the client is successful in his/her case OR double the attorney’s normal fees, whichever is the LESSER.
  • For example: If the Court awards the client R100 000, and the client and attorney did NOT enter into a Contingency Fee Agreement, the attorney will deliver his/her normal bill for work done (attorney and own client bill). The attorney’s fee will depend on what work he/she has performed and the client will be charged accordingly.  However, if a Contingency Fee Agreement was entered into, the attorney’s fee will be R25 000 or double the attorney’s normal fee, whichever is the lesser.  The attorney’s fee may not be more than R25 000 (25% of the R100 000), but it may be less than R25 000 if double the attorney’s normal fee is less than R25 000.  The 25% is merely set as the maximum the attorney can charge in a Contingency Fee Agreement.
  • The basis of the Contingency Fee Agreement is a “no-win-no-fee” basis. The attorney will only be entitled to fees for services rendered if the matter is successful (or partially successful) upon conclusion.  Successful means if the responsible party pays any compensation to the client, even only a percentage (partially successful).  If the matter is not successful (no compensation paid to client), the attorney will not be paid and will then not be able to give the client a bill.
  • Should the client lose the case, he/she does not have to pay his/her own attorney any legal fees, however, the client may get a court order against him/her to pay the taxed legal costs on a party and party basis of the winning party.
  • The client may withdraw from the Contingency Fee Agreement within a period of 14 days, calculated from the date of signing the agreement, by giving notice to the attorney in writing. In this instance no fees will be payable to the attorney.
  • Should the client terminate the Contingency Fee Agreement for any reason before its conclusion (after the period of 14 days from signature of the Agreement), the client will be liable to pay the attorney’s costs and expenses to date of withdrawal. The bill of costs will be drafted and taxed in accordance with the attorney’s normal fees.
  • The Contingency Fee Agreement must be in writing and signed by both parties and has to be concluded when the attorney takes on the matter, not later.
  • No contingency fee agreement may be entered into in respect of professional services to be rendered in any criminal proceedings or any proceedings in respect of any family law matter.

By

Lizelle Marx

lizelle@dyason.co.za