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Civil Justice Reform

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A key change introduced by Jackson is the introduction of damages based agreement (DBAs). In effect a contingency agreement, which have always been allowed in non-contentious work, DBAs provide another model for a business to work under.

DBAs are now allowed in all types of civil litigation. They are another type of ‘no win no fee’ agreement - however, the lawyer’s fee is related to the damages awarded, rather than the work done by the lawyer. The current concern as to whether the provision allows for hybrid DBAs is being reviewed by the Ministry of Justice – the outcome for which may not be seen until early 2014.

Conditional fee agreements (CFAs) remain available. However, for CFAs entered into on or after 1 April 2013, the success fee will be paid by the client and not the losing party. Similarly, the recoverability of after-the-event (ATE) insurance premiums is abolished. These two measures are specifically aimed at encouraging greater responsibility towards the generation of litigation costs. General damages have been enhanced by 10 per cent as a contribution to the burden.

See our general damages section for more information

Critical points:

  • For both CFAs and DBAs, the amount of the payment that the lawyer can take from the damages in personal injury cases will be capped at 25 per cent of damages (with future loss awards ring fenced). Under a DBA, the cap will be 35 per cent for employment disputes and 50 per cent elsewhere.
  • The indemnity principle remains with a DBA and credit will have to be given for any costs recovered for the paying party. Therefore, if recoverable costs exceed the value of the cut of damages going to the solicitor, the solicitor would not be able to recover more than what he would receive as a contingency fee.
  • The indemnity principle is not a problem with CFAs. Therefore a winning claimant’s solicitor will recover his costs from the losing party in full (as now) and in addition charge his client up to 25 per cent of the relevant damages (by way of "success fee").

Download a worked example of DBA v CFA (PDF, 113KB)

Exceptions:

  • Mesothelioma claims have been excluded from the provisions for the abolition of recoverability of CFA success fees and ATE premiums until a review of the impact of the Legal Aid, Sentencing and Punishment of Officers Act 2012 (LASPO) has been conducted (from April 2016).
  • Recoverability of ATE premiums for expert reports in clinical negligence claims is still allowed for the cost of a “reasonable number” of expert reports on liability and causation only (and not quantum). There is to be no limit to the maximum recoverable premium.

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