The Civil Justice Council (CJC) has recommended a number of ways to make damages-based agreements (DBAs) clearer and simpler.
DBAs, also known as contingency fee arrangements were one of the key civil litigation funding reforms set out by Lord Justice Jackson in his 2009 report, but remain an unpopular choice among lawyers due to uncertainties surrounding their use. They are a "no win no fee" funding option, under which the lawyer takes a percentage of the damages if the case is successful.
In a major report published this week, the CJC sets out 45 recommendations on their use. These include technical amendments to clarify their use, increasing some of the caps on payment, and allowing lawyers and clients to agree the "trigger point" at which a DBA becomes payable, and the circumstances under which it can be terminated.
The CJC also distinguishes between sequential hybrid DBAs and concurrent hybrid DBAs. For the former option, the CJC suggests the government clarify whether the solicitor can retain the monies recoverable under the non-DBA funding agreement, or whether that sum should be offset against the DBA fee. The CJC recommends that the government revisit the arguments in favour of the latter option.
Part 1 of the report considers the technical issues, and part 2 looks at the wider questions of government policy.
David Greene, partner at Edwin Coe and NLJ columnist, says: “The DBA regime has, thus far, not been a success.
“Few practitioners are offering them as an alternative to other methods of funding, such as CFAs. The two parts of the report offer first an immediate fix to the Regulations to overcome various technical difficulties but it is the second part that really addresses the issues for making the regime work.
“The key is the introduction of hybrid DBAs, ie being able to use a DBA as part of a package of funding for clients. The committee has proffered the view they should be introduced but the government has been hesitant. The government has said it will deal with the committee's Part 1 recommendations so we expect draft legislation in the Autumn. Part 2 will have to wait but it should open up the debate on the policy issues raised.”
Professor Rachael Mulheron, who chaired the CJC working party which produced the report, said: “DBAs have been used very sparingly by the legal profession since the Jackson reforms took effect in 2013. This has been unfortunate, given that the use of DBAs in contentious litigation was, arguably, the most novel aspect of those 2013 reforms.
“The working group was commissioned to explore the uncertainties which surround the current regulations, and to make recommendations to reduce or to eliminate uncertainties. The group canvassed 20 drafting issues, and 10 policy issues, which it considered would be relevant in the operation of DBAs.
“The CJC hopes that the work undertaken in this Report will help to inform, in a useful and constructive way, the redrafting of the DBA Regulations, to render DBAs a useful funding option in suitable cases. I am grateful for the hard work and support of all the members.”
Lord Dyson, Master of the Rolls, welcomed the report and urged the government to “consider further modifications to the regulations to help promote confidence in them as one of the funding arrangements available to those involved in a personal injury or commercial dispute”.
