‘To construe s 98 as prohibiting the charging of the premium when the client has effectively prevented the firm from obtaining a successful outcome by his or her own conduct would enable the client to ‘walk away’ from the firm at the eleventh hour (once all the hard preparation work for a trial had been done and the risk had been carried by the firm, in some cases for years) and have another firm harvest the fruits of that endeavour in the form of a successful outcome, without having to pay a premium for the benefit of the no win/no fee arrangement.’ Legal Services Board, per Emerton J at 
Legal Services Board v DF  VSC 292 is an interesting case for several reasons. It provides protection for legal practitioners who take on the risk of cases on a no-win, no fee basis. Generally taking on a case on a no-win, no fee basis means that if, for an example, in a personal injuries case, a plaintiff does not receive a ‘successful outcome’ such as compensation, then the lawyers do not receive a fee.
The difference in Legal Services Board v DF is that Her Honour held that there were in fact circumstances where, even though the client did not obtain a successful outcome, it may nevertheless be liable to pay fees.
The Costs Agreement
The central issue in this matter was the validity of a costs agreement which said that the client had to pay Supreme Court scale plus 25% if the client recovered anything in their litigation or they breached any of the following conditions of the no-win no-fee retainer:
· at all times tell us openly and honestly everything relevant to your case;
· fully co-operate with us and do everything we reasonably ask;
· accept and follow all reasonable advice we give you;
· do not change solicitors before your case is finalised.
Firstly, the receivers of the defendant unsuccessfully argued that: the costs agreement was void pursuant to s. 102 for breach of s. 97(4)(a) of theLegal Practice Act, (Vic) 1996. This is because it allegedly failed adequately to set out the circumstances that constituted a successful outcome in the matter (such as to justify the charging of fees, and the charging of a 25% uplift).
Further, the receivers argued that the costs agreement was void pursuant to the same provision for breach of s. 98(1) which implicitly prohibited the charging of an uplift fee otherwise than upon a successful outcome in the case.
In relation to the first point about the definition of a successful outcome, the receivers asked rhetorically:
‘Is an offer to pay costs a successful outcome? Is an offer to walk away a successful outcome? Again, a successful outcome might be no more than one dollar, in which case Mr Norrish would be liable for all of the solicitor/client costs plus the uplift fee.’
In my opinion, Her Honour responded with a common-sense approach, finding that the phrase ‘if you recover any money from your case’ was a sufficient definition of the ‘successful outcome’. These words, objectively construed, meant that ‘if you recover any compensation’, as opposed to simply ‘if you recover costs.’ This approach protects the client in the event of the absurd scenarios put forward by the receivers.
In the words of Her Honour:
‘the parties to the costs agreement would reasonably have understood what was contemplated by a ‘successful outcome’. The word “recovered” indicates that a successful outcome is not the payment of any money to the plaintiff, for example, pursuant to an order for costs. The payment of money is referrable to the plaintiff’s claim, and would have been understood that way by both [the client] and [the solicitor] at the time the agreement was entered into.
Breach of the Agreement by the Client
Perhaps more interesting is the Court’s willingness to allow the charging of an uplift otherwise than upon a ‘successful outcome’:
‘Section 98 of the 1996 Act allows a conditional costs agreement to impose a premium “on the successful outcome of the matter”. Although s 98(1) does not expressly provide that a premium may only be imposed on a successful outcome, its purpose is to provide for a premium to be charged in the specified circumstance and not otherwise. [at 38].
Significantly for practitioners, Her Honour continued:
‘However, I do not consider that s 98 should be construed as prohibiting the charging of the premium in the [event of breach of one of the four conditions]. Those conditions describe conduct by the client that would make it difficult if not impossible for the firm to obtain a successful outcome on the client’s behalf. The client’s undertaking not to breach any of the four conditions is an integral part of the firm obtaining a successful outcome for the client. The firm is entitled to charge the premium upon a successful outcome because it has assumed the risk of a no win/no fee arrangement. The four conditions form part of the management of that risk. To construe s 98 as prohibiting the charging of the premium when the client has effectively prevented the firm from obtaining a successful outcome by his or her own conduct would enable the client to ‘walk away’ from the firm at the eleventh hour (once all the hard preparation work for a trial had been done and the risk had been carried by the firm, in some cases for years) and have another firm harvest the fruits of that endeavour in the form of a successful outcome, without having to pay a premium for the benefit of the no win/no fee arrangement.’
One would hope that this decision would ultimately protect a class of clients as well as practitioners, by providing an incentive to practitioners to bear the risk of more meritorious claimants, claimants who otherwise would not have the opportunity to have their claims litigated.