With the introduction of section 33ZDA into the Supreme Court Act 1896 (Vic.) by the Justice Legislation Miscellaneous Amendments Act 2020 (Vic.), Victoria has become the first Australian jurisdiction to lift the nationwide prohibition on law firms charging contingency fees.
In doing so, however, Victoria has also undermined uniformity in the Legal Profession Uniform Law jurisdictions.
Contingency fees are the billing of legal costs as a percentage of awarded damages. They represent standard practice for law firms involved in certain types of civil litigation in the United States, as well as for litigation funders in Australia. However, Victoria is the first Australian to allow law firms to charge class action plaintiffs in this manner.
Specifically, section 33ZDA gives the Supreme Court of Victoria discretion to allow contingency fees where the court is “satisfied that it is appropriate or necessary to ensure that justice is done” and “despite anything to the contrary in the Legal Profession Uniform Law (Victoria)”.
The Legal Profession Uniform Law seeks to harmonise regulation of the Australian legal profession. It was commenced after the Model Legal Profession Bill project failed to bring about such harmonisation, due to variations in implementation between states and territories.1 Currently, Victoria and New South Wales are the only jurisdictions participating in the national Legal Profession Uniform Law scheme, with enabling legislation currently before the Parliament of Western Australia.2
In particular, section 183 of Victoria’s Legal Profession Uniform Law specificallyprohibits contingency fees for law firms.3 However the Victorian Law Reform Commission, in its 2018 report ‘Litigation Funding and Contingency Fees’, counter-intuitively argued that s183 “does not directly prohibit lawyers from being paid a contingency fee”, only “entering a costs agreement under which a contingency fee is payable”.4
What is significant is that New South Wales (currently the only other Uniform Law jurisdiction) maintains the prohibition on contingency fees. Further, Victoria now has two current laws which appear to conversely prohibit and permit the use of contingency fees for law firms in certain circumstances. At the very least, Victoria ought to seek the implementation of contingency fees by amending s183 of the Legal Profession Uniform Law to expressly permit the use contingency fees by law firms in class actions across all Uniform Law jurisdictions.
See also ‘Contingency fees: Loyalty under strain‘.
James Crutchley is an intern with the Queensland Law Society’s Offices of Legal Policy & General Counsel, and a Law/Behavioural Science undergraduate at the Queensland University of Technology.
3 Legal Profession Uniform Law (NSW)s183; Legal Profession Uniform Law (Victoria) Sch 1 s183(1).