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Unpacking Contingency Fees for Practitioners

Explained by Gert Nel

The issue of Contingency Fees are a constant topic of debate and the opinions and the approach vary from practitioner to practitioner.

The views raised in this presentation are those of the presenter substantiated with basic principles of costs, relevant case law, applicable literature, math and common sense.

As such the attached presentation notes should only serve as a reference and / or guideline the reader may consider upon deciding on his / her preferred approach.

Practitioners that make use of Contingency Fee Agreements are subjected to uncertainty in the absence of factual and reasonable guidelines from governing bodies, are under constant scrutiny by the Courts and forever being questioned by clients and or overzealous colleagues who are just as oblivious to the correct application of the Act.

A. INTRODUCTION

  1. Contingency fees are certainly one of the most contentious and debated topics in the field of the law of costs. Opinions as to the correct application of the provisions of the Contingency Fees Act 66 of 1997 (herein after referred to as the CFA and attached hereto as annexure LC1) vary from practitioner to practitioner. This should not be the position: ‘Guidance should be given about the qualification of what constitutes a “reasonable fee”’ (see para 5.25 of the South African Law Reform Commission (SALRC) Project 142 herein after referred to as P142 (page 251)).
  2. In para 5.34 of SALRC’s P142 the following is said: ‘The basic problems are that the 25% is seen as an entitlement by attorneys rather than as an overall limit of a fee that must still be reasonable in relation to work done’.
  3. Therein lies the critical question:
    How do we correctly determine a “reasonable” contingency fee?
  4. We start by discerning between:
    • a ‘Normal Fee’; and
    • a ‘Contingency Fee’, also referred to as a ‘Success Fee’ and/or an ‘Uplift Fee’.

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