How does no-win-no-fee work in South Africa?

No win no fee means your attorney only charges a fee if your claim succeeds. In South Africa these arrangements are regulated by the Contingency Fees Act 66 of 1997, and the rules are strict. The success fee cannot be more than double the attorney's normal fee, and it cannot be more than 25% of the amount awarded to you, whichever of those two figures is lower. The agreement must be in writing.

The word that trips people up is "fee". The cap applies to the attorney's professional fee. It does not cover disbursements, which are the out of pocket costs paid to third parties on your behalf. Those are usually still yours, win or lose, unless your agreement says otherwise in writing.

What the cap actually means

Two calculations happen, and you pay the lower one.

• Double the normal fee. The attorney works out what the file would have cost at their ordinary rates, then doubles it. That uplift is the reward for carrying the risk of getting nothing.
• 25% of the award. A quarter of the compensation you are actually awarded, excluding any costs recovered from the other side.

Whichever number is smaller is the maximum. In a large claim the doubled normal fee is often the lower figure, so 25% is a ceiling and not a default. Ask for both calculations in writing when the claim settles.

The 25% is worked out on the compensation, not on the party and party costs your opponent pays. In an RAF matter, where the Fund also pays a contribution to your legal costs if you succeed, that costs recovery is a separate stream and should not be swept into the calculation.

Disbursements are the part people miss

Disbursements in an injury or negligence claim are real money and they add up:

• medico-legal reports from orthopaedic surgeons, neurosurgeons, psychologists, occupational therapists and industrial psychologists
• an actuarial calculation of future loss of earnings
• an independent merits opinion in a medical negligence matter
• sheriff's fees, court filing fees, counsel's fees, travel and record retrieval costs

Some firms carry these and recover them out of the award. Some ask you to fund them as you go. Some carry them only until the claim fails and then invoice you. These are completely different deals. Ask which one you are being offered, and get the answer in the written agreement, not in a conversation.

Our cost page sets out typical ranges for these items.

What a valid agreement must contain

The Act requires the agreement to be in writing and signed by you. It must set out, in language you can follow:

1. The work the attorney will do.
2. What counts as success, and what counts as partial success. This matters. If "success" is defined loosely, a poor settlement can still trigger the full fee.
3. The normal fee that would have been charged, so the doubling calculation can be checked.
4. The percentage or uplift being charged, and confirmation that it is within the cap.
5. What happens to disbursements, and who carries them if the claim fails.
6. Your right to withdraw from the agreement, and what you would owe if you do.
7. Confirmation that you were told about other ways of funding the matter.

You must be given a copy. If you were not given one, ask for it in writing today.

Where a matter is settled, the Act also requires the attorney to record the settlement and to file an affidavit dealing with the fee. That is a protection for you. It means someone other than your attorney can see what was charged.

Where contingency agreements are not allowed

The Act does not permit contingency fee arrangements in criminal proceedings or in family law matters. A divorce or a maintenance dispute cannot be run on a percentage of what you receive. Contingency work in practice is concentrated in personal injury, RAF claims, medical negligence and some claims against the state.

Questions to ask before you sign

• What is your normal hourly rate, and what would this file cost at that rate?
• Is the fee capped at 25% or at double the normal fee, and which do you expect to apply here?
• Who pays for the medico-legal reports if we lose?
• What exactly counts as "success" under this agreement?
• If I terminate, what will I owe?
• Is VAT included in the figures you have quoted me?
• What happens to the costs the other side pays if I win?

Take the agreement home. Read it when you are not sitting across a desk. There is no rush that justifies signing something you do not understand, and no attorney worth using will object.

The alternatives

You do not have to use an attorney at all for an RAF claim. You can lodge directly with the Fund yourself at no cost. See How to claim from the Road Accident Fund. For a rejected insurance claim, the National Financial Ombud Scheme is free. For a complaint about a medical practitioner's conduct, the Health Professions Council of South Africa costs nothing.

If you qualify, Legal Aid South Africa on 0800 110 110 provides assistance based on a means test.

If you think you have been overcharged

Ask for a detailed statement of account showing the normal fee calculation, the contingency calculation and every disbursement. If the fee exceeds the cap, or there is no written agreement at all, raise it with the firm first and then complain to the Legal Practice Council. Fee disputes can also be taxed, which means an independent taxing master reviews the bill.