On 23.01.2013 the Ministry of Justice published the draft Damages-Based Agreements Regulations 2013 (“2013 Regulations”). These regulations will come into force on 1st April this year. The implementation of the regulations will allow for “contingency fee agreements” across all types of contentious litigation.
A damages-based agreement (“DBA”) is a private-funding arrangement between a representative and a client where the representative’s agreed fee is “contingent” upon the case being successful. If the case is successful then the representative takes a percentage of the damages awarded to the client.
The regulations set out under section 3 what a client and representative must comply with in order to ensure that the DBA is enforceable. These requirements are uncomplicated. The DBA must identify the claim to which it relates; specify whether it relates to the entire proceedings or part of the proceedings; the circumstances in which the fee becomes payable; and the reasoning behind setting the percentage of damages at that specific level.
Under the 2013 Regulations, in all claims excluding Personal Injury and employment matters, the maximum of the damages ultimately recovered by the client that the solicitor will be able to recover, is 50% . If both a solicitor and counsel are instructed under a DBA, the contingency fee that is ultimately payable to both representatives together, cannot exceed the 50% cap.