News & Knowledge
Proposed success-based fee arrangement in arbitrations in Hong Kong
現時，香港律師不能向當事人按條件收費 (即按結果收費或「不成功、不收費」 )。此限制源自傳統普通法的包攬訴訟和助訟的原則，基於公共政策理由，需要捍衛司法公義的純正性和確保第三方不能操縱訴訟的過程。
香港法律改革委員會（「法改會」 ）於 2021年12月15日發表《與仲裁結果有關的收費架構》報告書，建議撤銷禁止律師採用「與結果有關的收費架構」的規定，容許律師就在香港及在香港以外地方進行的仲裁，與客戶討論不同的收費協議。
- 按損害賠償收費協議：當事人只在仲裁中取得財務利益的情況下，方需向律師繳付費用，而費用上限定為該財務利益的 50%。
Currently, Hong Kong lawyers are not allowed to charge their clients on a conditional fee (a.k.a. success-based fee or “no win, no fee”) basis. This restriction stems from the traditional common law doctrine of champerty and maintenance, which was based on the public policy ground of protecting the purity of justice and to ensure that third-parties could not manipulate the litigation process.
In a report titled “Outcome Related Fee Structures for Arbitration” and released on 15 December 2021, the Law Reform Commission (the “Commission”) recommended lifting the prohibition on the use of outcome related fee structures (“ORFS”) and permitting lawyers to discuss payment options with clients in arbitrations taking place in and outside Hong Kong.
Arbitration is a method for resolving disputes between parties in private by an independent arbitrator. This is an alternative to “traditional” litigation in Courts and widely regarded as a more time and cost-efficient way to resolve disputes.
In its report, the Commission has proposed the use of ORFS in arbitrations, whereby clients and their lawyers may choose and agree upon three types of agreements:-
- Conditional Fee Agreements (CFA): client agrees to pay the lawyer an additional fee, known as a success fee. Such success fee is only payable in the event of a successful outcome in the claim.
- Damages-Based Agreements (DBA): client only pays the lawyer when the client obtains a financial benefit in the arbitration. The legal fee receivable by the lawyer is capped at 50 per cent of the financial benefit.
- Hybrid Damages-Based Agreements (Hybrid DBA): client pays a certain fee to lawyers regardless of the outcome of the case, and offers additional rewards to the lawyer based on the financial benefits obtained.
The recommendations bring obvious benefits to the legal industry in Hong Kong:-
- Enhance access to justice
The recommendations allow clients who cannot afford legal fees and payment by way of interim invoices greater access to justice. Some clients may be denied legal representation without these recommended arrangements and subsequently, will not be able to pursue what maybe a strong case. It also satisfies clients’ increasing demand for pricing and fee flexibility.
- Strengthening Hong Kong’s position as a major centre for arbitration
Many jurisdictions already allow lawyers to link their fees with the outcome of the arbitration, but not Hong Kong. When clients decide the seat of arbitration, they may want to consider the flexibility they may have when structuring fee arrangements with their lawyers. The amendments, if passed, will strengthen Hong Kong’s position as a major centre for arbitration.
Entering into a dispute is a cost sensitive matter, whether through the Courts or by way of arbitration, and is almost certainly an expensive process with no guarantee as to eventual expenditure and outcome. The recommendation, if adopted, is surely a positive step for legal practitioners and clients alike.
Anthony Marrin (Consultant)
Priscilla Wong (Trainee Solicitor)
H. Y. Leung & Co., LLP