From April 2013, the UK Legal Aid, Sentencing and Punishment
of Offenders Act will introduce a contingency fee agreements
Contingency fee agreements are also known as damages-based
agreements and provide a mechanism for lawyers to charge fees as a
percentage of the amount the court awards in damages.
This legislative change will see the UK move more towards a US
litigation funding model.
Australian (and other) companies in the UK may face the
possibility of an increased risk of litigation
Contingency fee agreements will provide another method to fund
litigation, aside from existing legal expenses insurance, legal aid
Increased competition may force existing litigation-funding
companies to reduce their charges
The prospect of greater reward may encourage Plaintiff lawyers
to take on high-risk class actions against well-funded
Litigation funders here already take a proportion of their
clients' win on a contingency basis. Recently, more than 2000
victims of the Brisbane floods signed funding agreements with IMF
(Australia) that will deliver IMF up to 30 per cent of any
ex-gratia payments received after 1 January 2013, or after issuing
The question whether Australia will, at some point in the
future, introduce similar legislative change allowing lawyers to
enter into contingency fee agreements with their clients remains to
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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