Gauteng High Court ruling restricts contingency fees for legal practitioners

IN A blow for many attorneys who enter into a contingency fee agreement with their clients - especially in Road Accident Fund matters - three judges ordered that contingency fees agreements must strictly comply with the Act, and it is not permissible for a legal practitioner to recover more than 25% of the capital amount towards fees.

- ZELDA VENTER

The Gauteng High Court, Pretoria, last week Friday found that the Contingency Fee Act was not enacted to provide legal practitioners with an alternative preferential method of determining their fees over and above normal fees.

“Normal fees” as defined in the Act, remain the standard by which the reasonableness of the fees of a legal practitioner is determined. The surcharge which is added to normal fees to make up the success fee bears no relation to the value of services rendered, but is a function of risk, Judge Anthony Millar, who wrote the judgment, said.

Contingency fees are a “no win, no fee” payment arrangement where a lawyer's fee is paid only if the client wins the case. The lawyer receives a predetermined percentage of the money recovered if the client's case is won. The fee is a percentage of the total settlement or award - usually 25% of the recovered amount.