Published: 18 October 2011
Author: Michael Burdess
‘No Win No Fee’ – is it fuelling “nuisance” litigation?
There are not many leading injury compensation law firms that do not offer a variation on the policy widely known as ‘No Win No Fee’. That is, the fee arrangement that broadly allows clients to pursue litigation subject to the law firm agreeing to fund it.*
Many people, including our own law firm, strongly support the arrangement because it puts the cost of pursuing justice through the courts within reach of the everyday person.
But there is a lot of misinformation and misunderstanding around about ‘no win, no fee’ agreements. Just look at the various newspaper articles floating around on the internet. There are also attacks on the usual practice of mediating a dispute.
You may have heard stories of ‘No Win No Fee’ (or NWNF) arrangements putting pressure on employers and insurers to settle claims they otherwise wouldn’t, or fuelling ‘nuisance’ litigation. This is a myth.
The two big insurers in Victoria, the Victorian WorkCover Authority and the Transport Accident Commission, do not settle so called ‘nuisance’ claims. They simply don’t pay on claims that have no merit, even if it would be cheaper to settle such a claim. There are also very strict obligations on both lawyers and their clients relating to frivolous claims. If a Court finds that a claim should never have been brought, and the lawyer knew this, they will be held liable for the costs. This is a significant deterrent for launching these kinds of cases, not that many lawyers would consider this anyway.
NWNF does not flood the Courts with frivolous cases. In fact, frivolous cases invariably are brought by unrepresented litigants, that is, claimants without lawyers.
Without NWNF, the vast majority of injured people couldn’t afford access to a lawyer and wouldn’t get the compensation they deserve. Think of those with terminal lung disease from asbestos, or victims of institutional abuse. Thoroughly deserving of compensation, they would have been denied any access to the law due to their financial position. It is not fair when only those with significant means can access the law.
Despite what you may have heard, all parties, including the insurers and the Government, want to resolve cases before they reach the courtroom. It saves costs for all involved and avoids the often stressful Court hearing for the injured person, as well as allowing them earlier access to compensation to which they are entitled.
Insurers don’t settle claims out of Court because of NWNF, they settle because it’s a better for them.
The Court in a litigious case usually orders mediation. All parties in the case meet to discuss the claim and see if it can be resolved. A mediator, a third party uninterested in the outcome of the dispute helps the parties to try and resolve the case. If the parties don’t reach agreement, the matter goes on to be heard by a Judge.
There’s no mystery in the process.
* Not all no win/no fee policies are the same. RCT Stringer Clark for example do not require up front payment for out of pocket expenses, such as court issuing fees, medical report fees etc. Also, RCT Stringer Clark will not require an unsuccessful claimant to reimburse the cost of these fees as part of the no win/no fee arrangement.
Michael Burdess practices in the area of personal injury including WorkSafe and TAC at Stringer Clark Warrnambool. He has a particular interest in industrial relations and discrimination claims and has previously worked at the Disability Discrimination Legal Service in Melbourne.