Worth Richard: Lawyers and Conveyancers Bill — In Committee 
Worth Richard: Lawyers and Conveyancers Bill — In Committee 
[Volume:629;Page:1563] 
Dr RICHARD WORTH (National) 
: 
 The Minister is right to identify the provisions relating to conditional fee agreements as the area of particular interest in Part 11 of the Lawyers and Conveyancers Bill. It is a small part in terms of its number of clauses but clearly it is the most significant part. Other parts of Part 11 primarily concern themselves with transitional provisions. 
I would like to speak briefly on the topic of conditional fee agreements and to note two things. First of all there are definitions of the relevant provisions. The definition of “conditional fee agreement” is “an agreement under which a lawyer agrees with a client that some or all of the lawyer’s fees and expenses for the provision to that client of advocacy or litigation services in respect of a matter are payable only if the outcome of that matter is successful”. Then there is a definition of a “premium” which in part states: “Premium in relation to a conditional fee agreement means remuneration that a lawyer may become entitled to under the agreement in addition to a normal fee being remuneration by way of premium that— … (d) is not calculated as a proportion of the amount recovered.” 
So in the context of what passes for conditional fee agreements in various parts of the world this is very much a Clayton’s conditional fee agreement because conditional fee agreements are often calculated in a similar way to the Lloyd’s arrangements of “no cure no pay”. Maybe those conditional fee agreements were seen by the officials as innovative and scary. The law has been that conditional fee arrangements are currently not offered because of old causes of action under the common law called maintenance and champerty. 
I understand that the officials were of the view that the provisions as drafted were not too detailed given that the introduction of these arrangements marks a significant change to the current law and the importance of the restriction prohibiting the charging of a proportion of the amount recovered. There should be I would argue support for conditional fee agreements and the main reason for permitting those types of arrangements is that they improve access to justice for people who would otherwise find it difficult to get a lawyer. 
 It is the old problem reflected in the line that the courts are open to everyone like the Ritz Hotel. In the context of what we are now talking about that means the wealthy obviously have no difficulty in meeting the costs of a lawyer. For those who are at the bottom of the socio-economic heap legal aid is generally available. It is those in the middle who have significant problems. That is where I would argue conditional fee arrangements have real merit. 
The bill allows for conditional fee arrangements: a normal fee or a normal fee plus a premium that is dependent on the matter succeeding. The premium may compensate the lawyer for the risk of not being paid at all and for the disadvantage—which may be considerable—of not receiving payments on account that cannot be calculated as a proportion of the amount recovered. There are some exclusions. In general terms exclusions relate to criminal immigration family and judicial review proceedings. National supports the introduction of conditional fees on the basis that these arrangements afford flexibility and choice to both clients and lawyers and will enable people to take litigation that they might otherwise be unable to afford. 
Those who are interested to read the writings of John Grisham may know that he has recently published a book called  
The King of Torts 
. It provides an insight into what goes on in the United States where contingency fee arrangements are taken to a high level of sophistication. I am not suggesting we need go to that level of what some might call and I have called sophistication. But I do believe that it is appropriate to have regard to the amount of the recovery in fixing the amount of the contingency fee. I do not really understand the contrary argument given the principle behind contingency fees. 
I also suspect that as the Minister has indicated contingency fees on the basis I have described do exist in the market. It seems quite reasonable to me that where the lawyer is not much interested in taking the case an injustice may be done unless there is some premium related to the amount recovered. So as long as the lawyer makes a reasonable assessment of the outcome the New Zealand climate—in which jury awards and punitive damages are extremely rare—makes it pretty unlikely that huge windfalls to lawyers will result. Of course lawyers are still subject in addition to the fee revision process. 
Really contingency fees are simply an advance economic allocation agreed between lawyer and client after due regard for risk. For my money the conditional fee agreements as described in the legislation do not go far enough.