Contingency Fees and Access to Justice in Australia

Abstract

IMPROVING access to justice is a perennial issue in Australia, and internationally. As an Australian jurist has noted:1At almost any given time in Australia, there is an inquiry under way into access to justice or consideration is being given to the latest report on the subject.Budgetary constraints in most developed countries have led, in recent years, to the issue becoming more controversial and the subject of broader community debate. In February 2013, a Victoria Supreme Court Judge, Lex Lasry, took the highly unusual step of staying a trial for attempted murder following the decision by Victoria Legal Aid to provide only a barrister, and not a solicitor, to the defendant. The funding body took the step in response to what it considered to be chronically inadequate government funding.2 In May of 2013, the Victorian Office of Public Prosecutions was aware of fortyseven applications for stays in other criminal proceedings that had already been made or were being made on the basis of inadequate funding of the defense.3Victoria Legal Aid prioritizes funding criminal proceedings,4 and so difficulties in the civil arena may be considered even greater. In response to those difficulties, the Australian Productivity Commission was recently asked by the Commonwealth to enquire into how access to justice may be improved in civil matters and has received more than eighty submissions in response to its issues paper released in September 2013.5 A submission on behalf of one of Australia's largest plaintiff law firms, Maurice Blackburn, suggested that Allowing lawyers to charge contingency fees would substantially improve access to justice.6 This is not the first time such a change has been proposed, but we suggest that it is unlikely to enhance access to justice significantly in Australia and carries risks that far outweigh any possible benefit.I. Arguments in Favor of the ProposalLaws in every Australian State and Territory prohibit lawyers from entering into costs agreements which provide for the payment of a contingency fee-that is, a fee calculated by reference to the amount of any award or settlement or the value of any property that may be recovered in any proceeding to which the fee relates. Proponents have suggested recently that the existing prohibition on contingency fees be lifted. Advocates for this proposal tend to rely on three arguments, namely:* contingency fees will improve access to justice;* in the context of other possible funding arrangements, and changes in other jurisdictions, the prohibition can no longer be justified; and* contingency fees provide greater certainty, clarity and proportionality than other fee structures.We address each argument in turn and then discuss the significant risks lifting the prohibition would entail.A. Access to JusticeProponents often assert that allowing lawyers to enter into contingency fee agreements would provide potential litigants with an additional source of funding and, in doing so, promote access to justice for persons otherwise unable to afford legal representation. It is not clear to us, however, that contingency fees are capable of addressing the areas in which there is greatest unmet legal need.In 2012, the Law and Justice Foundation of New South Wales conducted a survey aimed to identify the prevalence of all types of legal problems in Australia (the LAW Survey)? According to the LAW Survey, the most common legal problems are consumer, crime, housing and government problems.7 8 These are also the most common legal problems for which people do not seek legal advice.9 By contrast, the legal problems for which people most often seek legal advice are family law, personal injury and money problems.10In our view, the unmet legal need identified by the LAW Survey is unlikely to be addressed by allowing lawyers to enter contingency fee agreements. Criminal law matters are generally (and correctly, in our view) excluded from any proposal to allow lawyers to charge contingency fees. …