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Costs agreement

Costs agreement

A properly made costs agreement is a contract for the payment of legal costs. It may also deal with other rights and responsibilities between a law practice and a client.

A costs agreement is not always required.  

A costs agreement must be in writing or evidenced in writing.  It also needs to clearly include an offer to enter into a costs agreement that can be accepted in writing.  

A costs agreement that is invalid under Division 5 of the Legal Profession Act 2007 may not be enforceable.  

Costs agreements can be used to meet costs disclosure obligations (when disclosure is required).

'No win, no fee' agreements

Lawyers may enter ‘no win, no fee’ arrangements where they only charge fees if you win the case. 

Before entering the agreement, you must agree with your lawyer on what constitutes a ‘successful outcome’. These details must be included in the ‘no win, no fee’ agreement.  

The agreement must also contain:  

  • a statement telling you that you can seek independent legal advice before you sign  
  • a cooling-off period of not less than 5 business days during which you may terminate the agreement in writing.  

It should also state whether the firm can recover any outlays, regardless of the outcome.  

The agreement must be in writing, in plain language and signed by you. 

Extra fees for ‘no win, no fee’ agreements

Regardless of the outcome in a ‘no win, no fee’ agreement, your lawyer is entitled to recover money spent pursuing your claim (disbursements). 

Examples of disbursements include court filing fees and barrister fees.

If your case is unsuccessful, you may be required to pay the other party’s legal costs, even if you have a ‘no win, no fee’ agreement. 

Depending on the type of matter, your lawyer may charge an ‘uplift fee’ of up to 25% of the legal costs. This fee is only paid if your case is successful.