THE LAW ON CHAMPERTY AND CONTINGENCY FEE AGREEMENTS BY ADVOCATES

The general rule under section 50 of the Advocates Act Cap 267  is that advocates are allowed to enter into agreements with their clients as to their remuneration in respect of any contentious matter done by them.

Section 51 provides for special requirements for the agreement under section 50. It states that the agreement shall be;

(i) in writing.
(ii) signed by the person bound by it.
(iii) contain a certificate signed by the notary public to the effect that the person bound by the agreement had explained to him or her the nature of the agreement and appeared to understand the agreement. A copy of the certificate shall be sent to the secretary of the Law Council by prepaid registered post.
 
However, section 55(1)(b) of the Advocates Act Cap 267 prohibits an Advocate to prosecute a contentious matter where the payment should be made only in the event of success.

Furthermore, on contingent fees, Regulation 26 of the Advocates (Professional Conduct) Regulations prohibits an advocate from entering into an agreement for sharing of a proportion of the proceeds of a judgment whether by way of percentage or otherwise, either as -
(a) part of the entire amount of his or her professional fees; or
(b) in consideration of advancing to a client funds for disbursement.

In the Supreme court case of Shell (u) & Ors versus Fred Muwema & Anor CIVIL APPEAL No. 02 of 2013. Kitumba JSC as he then was, held that the law prohibiting champerty and maintenance by advocates has been codified in the Advocates Act and Regulations made there under.

In that case, the 1st respondent sought to share in the proceeds of the appellants claim at 16% in case court awarded the claim, as per the remuneration agreement. The court held that such fees contingent on the success of the outcome of the case were illegal and that the remuneration agreement was champertous in nature.

The court also found that remuneration stipulated in this fee agreement was in form of percentages and not a gross sum or salary as provided for in section 50(1) and held that this made the remuneration agreement illegal as per section 50(1) of the Advocates Act.

The court in arriving at its decision relied on the judgement of Lord Denning in Re Trepca Mines Ltd [1962]3 ALL ER 351, where he said that:

“The reason why the common law condemns champerty is because of the abuses to which it may give rise. The common law fears that the champertous maintainer might be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses.”

The court in declaring such arrangements illegal took into account the level of civic education of the general population and the numerous complaints made by lay people against advocates’ malpractices.