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Daniel Meyerowitz-Katz:

A recent decision by the Victorian Court of Appeal was a victory for people with strong legal claims but without the means to pursue them.

In the case of Mainieri v Cirillo [2014] VSCA 227, their Honours Nettle, Hansen, and Santamaria JJA delivered the most authoritative judgement to date on the vexed issue of contingent liability costs agreements — in which a lawyer and a client agree that the client will only have to pay for the costs of their legal representation if their claim is successful and they win an order that the other side should pay for their costs.

These agreements are controversial as it means that the client will never have to pay anything themselves, and the lawyer’s fees will only ever be paid by the other side to the dispute, otherwise the lawyer is working for free.

The idea behind costs orders (where the loser has to pay the winner’s legal fees) is that no one should have to be out of pocket for enforcing their legal rights. So, if the winning party is not out of pocket and have had to pay nothing to their lawyers, why should the other side have to pay a costs order?

In Cirillo‘s case, a woman had agreed with her solicitor that she would only have to pay her costs if money became available to do so because of a court order or a settlement which explicitly provided for the costs to be paid. The agreement further provided that the amount to be paid would not exceed such costs provisions — meaning that even if she was awarded a lot of money in the settlement or judgement and the costs order did not cover the full costs of her legal fees, she would not have to pay any more than the amount of the costs order.

The Court considered the decision of the NSW Court of Appeal in Wentworth v Rogers [2006] NSWCA 145, in which two judges were divided on the issue. Basten JA was opposed to costs orders for conditional costs agreements in which costs were only payable on the awarding of a costs order, however Santow JA believed that such orders were in the public interest, and stressed “the importance of such agreements in promoting access to justice which may otherwise be unaffordable.”

Despite subsequent comments of judges in the NSWCA favouring Basten JA’s ruling, the Victorian Court in Cirillo‘s case ruled in favour of adopting Santow JA’s comments. Unlike in Wentworth, the court in Cirillo was actually determining whether or not such a costs order could be made, therefore the decision is considered authoritative.

As their Honours held, contingent liability costs agreements are regarded by the law as both “just and socially desirable”.

Levitt Robinson are market leaders in alternative fee arrangements, including conditional costs agreements. We often find that, as was the case in Cirillo, the very injustice that is the subject of the claim has deprived the claimant of the funds to pursue their rights.

Contingent liability costs agreements are an important component in the framework of providing access to justice. Contact us today to discuss your options in funding your legal claim.

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Daniel Meyerowitz-Katz is a solicitor at Levitt Robinson Solicitors