Civil Justice Council urges changes to boost use of damages-based agreements
A Civil Justice Council (CJC) report has made 45 recommendations aimed at boosting the uptake of Damages-Based Agreements (DBAs), which were a key part of the Jackson reforms but whose use has been limited.
Under DBAs (also known as contingency fee agreements), if the case is successful, the lawyer’s fee is calculated as a percentage of the financial benefit obtained; if the case is lost, no fee is payable to the lawyer.
The recommendations in the report, The Damages-Based Agreements Reform Project: Drafting and Policy Issues, are “designed to make the statutory regime relating to DBAs simpler and clearer, in order to assist lawyers and their clients who are considering the use of that method of funding”, the CJC said.
They include:
- Making a number of technical amendments to the existing regulations, "designed to make them clearer, and therefore more attractive, as a funding option";
- Increasing some of the caps on payments for cases – "for example, where a defendant successfully defends a personal injury action"; 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 working group, chaired by Professor Rachel Mulheron of Queen Mary University of London, also distinguished between sequential hybrid DBAs and concurrent hybrid DBAs, in accordance with the Government’s terms of reference.
In relation to sequential DBAs, the group suggested that the Government should clarify whether, in the event of success, 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 group also recommended that the Government should revisit the arguments in favour of concurrent hybrid DBAs.
The report was produced following a request by the Ministry of Justice (MoJ) to the CJC, in December 2014, to advise on ways of clarifying the DBA Regulations 2013.
The Master of the Rolls, Lord Dyson, said: “I welcome the Government’s invitation to the CJC to address some of the issues relating to DBAs, and I now urge it 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.
“DBAs were envisaged by Lord Justice Jackson in his report Review of Civil Litigation Costs (December 2009) as an important funding option available to those wishing to pursue or defend a claim. They have, however, been used infrequently since then by lawyers and their clients as a method of funding litigation. I hope that the changes recommended in this report will encourage the greater use of DBAs.”
Professor Mulheron 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.”