For an agreement to be legally enforceable, it must move beyond a simple verbal understanding and exist as a “glass box” of transparency. The primary solution for a claimant is a written contract that strictly adheres to the statutory requirements of the CFA. In the South African legal landscape, there is no such thing as a “common law” contingency fee agreement; any contract that deviates from the Act is considered a systemic failure and is null and void from its inception.

To be valid, the agreement must be signed by both the client and the legal practitioner at a sufficiently early stage of the proceedings. It must clearly state the proceedings to which it relates and provide a detailed breakdown of how the fees will be calculated. Furthermore, the attorney has an executive responsibility to inform the client of other financing options and the risks of litigation, including the possibility of paying the opponent’s taxed costs if the case is lost. This level of disclosure ensures that the client maintains their kedaulatan (sovereignty) throughout the legal process.

The Statutory Cap: 25% and the VAT-Inclusive Logic

The most critical hardware of the RAF contingency fee agreement is the limitation on the success fee. The law provides a dual-cap system to protect the claimant’s capital award from excessive depletion. An attorney may only charge the lesser of the following two amounts:

  • Double the Normal Fee: The success fee (the “uplift”) cannot exceed 100% of the attorney’s normal hourly rate for the work actually performed.

    The 25% Cap: The total fee, including the success fee, cannot exceed 25% of the capital amount awarded to the client in damages.

    A landmark judicial reset occurred with the November 2025 Full Bench judgment in De Bod v Road Accident Fund. This ruling decisively confirmed that the 25% cap is inclusive of Value-Added Tax (VAT). Historically, some practitioners attempted to charge 25% plus an additional 15% for VAT, effectively taking 28.75% of the client’s award. The courts have now categorized this as a form of over-reaching. By including VAT within the 25% limit, the judiciary has created a protective shield for the claimant, ensuring that at least 75% of the awarded damages (excluding costs) reaches the person who suffered the injury.

    Disbursements and the “No Win, No Fee” Promise

    While the attorney’s fees are contingent on success, the “hardware” of a claim also involves significant disbursements. These are out-of-pocket expenses for expert witnesses, such as orthopedic surgeons, industrial psychologists, and actuaries, which are necessary to prove the quantum of damages. In a high-fidelity contingency agreement, the attorney typically carries these costs upfront.