NIGERIA Law and Practice Contributed by: Tayo Oyetibo LP
5.3 Contingency Fee Arrangement Contingency fee arrangements are recognised and permitted in Nigeria, subject to regulatory safeguards. Such arrangements are governed by the Rules of Professional Conduct for Legal Practitioners 2023 (“RPC”), which allows legal practitioners to agree with clients that their remuneration will be contingent upon the successful outcome of a matter. Typically, this may take the form of a percentage of the sum recovered or a success-based fee structure. The RPC requires that any such arrangement must satisfy certain conditions, including that: • the fee agreement is fair and reasonable in all the circumstances, having regard to the risk and uncertainty of recovery; • the agreement is not vitiated by fraud, mistake, undue influence or any other factor that would render it inequitable; • the arrangement is not contrary to public policy; and • it is reasonably apparent that the client has a bona fide and sustainable cause of action. 5.4 Insurance Insurance coverage for disputes in Nigeria exists, but it is limited in scope and less developed and wide- spread than in some other jurisdictions. In principle, parties may obtain insurance coverage that responds to risks arising from litigation, arbitra- tion or ADR. In practice, standalone dispute funding or litigation insurance products are not widely available in Nigeria. Coverage is typically embedded in broader insurance policies rather than procured specifically for dispute resolution. That said, the market is evolv- ing, particularly in light of the growing acceptance of third-party funding in arbitration under the Arbitration and Mediation Act 2023. This may, over time, drive increased development of insurance and risk-transfer products tailored to dispute resolution. 5.5 Costs Dispute resolution costs are, in principle, recoverable in Nigeria, both in litigation and arbitration, although
fession. It also provides indicative scales and factors to be considered in determining appropriate fees. In addition to the Remuneration Order, legal practi- tioners are guided by broader professional principles, including the nature and complexity of the matter, the time and skill required, the value of the subject matter and the level of responsibility assumed. In practice, while the Remuneration Order provides a regulatory baseline, legal fees, particularly in conten- tious and high-value commercial matters, are often negotiated and agreed between counsel and client, subject always to compliance with applicable profes- sional rules. 5.2 Third-Party Funding The availability of third-party funding in Nigeria depends on the dispute resolution mechanism in question and remains a developing area of law. Traditionally, under Nigerian law, third-party fund- ing arrangements in litigation have been viewed with caution, largely due to the common law doctrines of maintenance and champerty, which historically restrict non-party funding of litigation in exchange for a share of the proceeds. As a result, there is no clear statu- tory framework expressly permitting third-party fund- ing in court proceedings and its enforceability remains uncertain. However, the position is materially different in arbi- tration. The Arbitration and Mediation Act 2023 has expressly recognised and legitimised third-party fund- ing in arbitral proceedings. In particular, Section 61 of the Act permits parties to obtain funding from external entities to finance arbitration in exchange for a return tied to the outcome of the dispute. The Act also intro- duces a framework for disclosure of funding arrange- ments, thereby enhancing transparency and aligning Nigeria with international best practice. Accordingly, while third-party funding is now firmly established and permissible in arbitration, its appli- cation in litigation remains unsettled and subject to legal constraints, pending further judicial or legislative clarification.
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