How Do Contingency Fees Work in No Win, No Fee Debt Collection?

A contingency fee agreement (CFA) is a written agreement under which the attorney is only paid if the client wins, with the fee capped at 25% of the total amount (excluding costs) awarded under section 35 of the Legal Practice Act 28 of 2014. In a no win, no fee debt-collection matter, the client pays nothing upfront and the attorney recovers fees only from what is collected — though the client remains liable for the opposing party’s costs and reasonable attorney-and-client fees if the claim fails. The agreement must be in writing and signed by both parties; it is unenforceable until the court has taxed and approved the fee after the matter is finally resolved.

What a Contingency Fee Agreement Is — and Why It Exists

A contingency fee agreement is a written contract in which the attorney’s fee is contingent on the client succeeding. If the client loses, the attorney receives no contingency fee. In South Africa, contingency fees are governed by sections 35–39 of the Legal Practice Act 28 of 2014, which repealed and replaced the earlier Contingency Fees Act 66 of 1997. “No win, no fee” is the consumer-facing label for the same arrangement.

The framework regulates contingency fees rather than prohibiting them because it opens access to justice for clients who cannot afford upfront legal fees — particularly in meritorious claims against well-resourced or evasive defendants.

The Key Statutory Rules: Caps, Disclosure, and Court Approval

Section 35 of the Legal Practice Act sets four hard rules that every valid CFA must meet.

• The 25% cap. The contingency fee is capped at 25% of the total amount awarded (excluding costs). A higher percentage is unenforceable.
• Written agreement only. Section 35(1) requires the CFA to be in writing and signed by both attorney and client. Oral agreements are not recognised.
• Mandatory disclosures. Section 35(3) requires the attorney to explain in plain language: the percentage, the client’s possible liability for the opposing party’s costs and disbursements if unsuccessful, any other fees that may become payable, and the client’s right to a copy of the agreement.
• Court approval after the fact. Section 35(5) makes the agreement unenforceable until the court has taxed and approved the fee after the matter is resolved.

The Legal Practice Council (LPC) supervises attorney compliance and can investigate complaints about non-compliant agreements.

How a No Win, No Fee Debt-Collection Matter Actually Runs

A contingency fee matter follows a predictable sequence. The seven steps below cover a standard debt-collection claim from initial assessment to the moment the attorney takes their cut.

1. Initial assessment. The attorney evaluates the merits and the realistic recovery prospects before agreeing to take the matter on contingency. A weak claim or an insolvent debtor is declined.
2. Client consultation and CFA signing. The attorney explains the agreement, the 25% cap, and the cost risk if the matter fails. The client signs and receives a copy.
3. Demand and pre-litigation. A letter of demand is sent. If no payment follows, the matter is escalated.
4. Issuance and pleading. Summons is issued in the Magistrate’s Court of the district where the debtor resides or where the cause of action arose (for claims up to R400,000), or in the appropriate High Court division for larger claims.
5. Pre-trial and trial. The matter is set down. Judgment is obtained by default, by consent, or after trial.
6. Recovery and fee calculation. The contingency fee is calculated at 25% of the amount recovered. Disbursements are recovered separately.
7. Court taxation. The fee and disbursements are submitted to the taxing master. Only after taxation does the attorney take their cut.

What “No Win, No Fee” Means in Practice — and What It Doesn’t

The slogan is simple, but the reality has important edges.

• No upfront fees. The client does not pay attorney fees while the matter runs.
• No contingency fee if the client loses. The attorney does not receive the success percentage on an unsuccessful matter.
• The client is not off the hook for costs. If the matter fails, the client remains personally liable to the attorney for reasonable fees on an attorney-and-client scale, and to the opposing party for costs awarded against the client.
• Disbursements are separate. Sheriff’s fees, tracing fees, expert fees, and filing fees are typically recoverable from the client regardless of outcome.

The CFA should also define what “success” means and how a partial recovery is treated.

The Risk Allocation: Why the Court Approves the Fee Afterwards

Section 35(5) gives the court the final say on whether a contingency fee is reasonable in light of the work done, the complexity of the matter, the risk undertaken, and the result achieved. This back-end approval is what prevents attorneys from extracting disproportionate fees — a fee that exceeds the 25% cap, omits mandatory disclosures, or is concluded under duress can be set aside on taxation.

The South Gauteng High Court’s judgment in Bekker v De Agrela and Others ([2022] ZAGPJHC 939; 25 November 2022) reaffirmed that strict compliance is required — courts will not approve fees under a non-compliant agreement. If the attorney breaches the framework, the Legal Practice Council can take disciplinary action and the client can challenge the fee on taxation.

Comparing CFAs to Other Fee Arrangements in Debt Collection

Contingency fees are one of several fee structures an attorney might offer on a debt-collection matter.

Arrangement	When the Attorney Is Paid	Client’s Cost Exposure on a Loss	Typical Use
CFA (no win, no fee)	A capped percentage of what is recovered (maximum 25%)	Opponent’s costs plus own attorney’s attorney-and-client fees	Meritorious claims the client cannot afford to fund upfront
Standard fee (hourly / tariff)	Time-and-disbursement basis regardless of outcome	Highest cost exposure for the client	Open-ended litigation with uncertain recovery
Fee-on-recovery (no success premium)	A negotiated fixed fee payable only on successful recovery	Limited to disbursements and own-attorney fees	Undisputed debts collected without litigation
Hybrid	Reduced retainer plus a success component (still subject to the 25% cap)	Reduced but not eliminated	Matters needing partial funding and shared risk

When a No Win, No Fee Arrangement Makes Sense — and When It Doesn’t

A CFA is a tool, not a default. It works well where the claim is undisputed or strongly evidenced, the debtor is solvent, and the only barrier to recovery is the cost of pursuing them. The claim also needs to be large enough that the 25% fee meaningfully compensates the attorney for the risk taken.

It does not make sense where liability is genuinely disputed, where the debtor is clearly insolvent, or where the calculated fee would be uneconomical. The attorney is not obliged to take a matter on contingency and may decline if the merits or recovery prospects are weak. Burger Huyser Attorneys’ dedicated Debt Collection Department, led by Madeleine Conway with over 42 years of experience, applies this filter when deciding whether a no win, no fee instruction is appropriate for a creditor’s matter.

Frequently Asked Questions

Is “no win, no fee” the same as a contingency fee agreement?

Yes. “No win, no fee” is the consumer-facing label for a contingency fee agreement (CFA) under section 35 of the Legal Practice Act 28 of 2014. Both terms describe the same arrangement.

What percentage can a contingency fee be in South Africa?

The Legal Practice Act 28 of 2014 caps contingency fees at 25% of the total amount awarded (excluding costs). A higher percentage is unenforceable. Disbursements are recoverable separately.

Does the client pay anything if they lose a no win, no fee case?

The client does not pay the contingency percentage on a loss, but they remain personally liable for any costs awarded against them and may be liable to their own attorney for reasonable fees on a non-contingency basis.

Does the court have to approve a contingency fee before the matter starts?

No. Court approval happens after the matter is resolved. Under section 35(5) of the Legal Practice Act, a contingency fee agreement is unenforceable until the court has taxed and approved it at the conclusion of the matter.

What happens if the attorney breaches the contingency fee agreement?

The client can challenge the fee on taxation, ask the court to set it aside, or lodge a complaint with the Legal Practice Council. The Bekker v De Agrela and Others (2022) judgment confirms that strict compliance is enforced by the courts.

Can Burger Huyser take my debt-collection matter on a no win, no fee basis?

Burger Huyser Attorneys’ dedicated Debt Collection Department considers no win, no fee instructions on debt-collection matters with reasonable merits and realistic recovery prospects. Contact the firm’s head office in Linden, Randburg (011 888 0246) or the dedicated Debt Collection Department on 011 446 5960 (mobile 079 109 8470) to start a merits discussion.

Contact Burger Huyser Attorneys’ dedicated Debt Collection Department on 011 446 5960 (mobile 079 109 8470) for a merits discussion. The firm considers no win, no fee instructions on debt-collection matters with reasonable merits and realistic recovery prospects, with fees charged under a court-approved contingency fee agreement capped at 25% of the amount recovered. Burger Huyser carries a 4.8/5 average across 250+ Google reviews (Trustindex verified “Top Rated Law Firm in South Africa”) and walks clients through the CFA framework, the filing pathway (Magistrate’s Court for claims up to R400,000, Gauteng Division of the High Court for larger matters), and the recovery process step by step.