Damages based agreements - CJC recommendations to increase their popularity?

09 Sep 2015

Partner and head of costs, David Caswell discusses the possible implications of the Civil Justice Council report on how the governing of Damages Based Agreements can be improved...

On 2 September 2015, the Civil Justice Council ('CJC') published a report setting out a number of recommendations as to how the statutory regime governing Damages Based Agreements ('DBAs') can be improved, in order to make this method of funding litigation more attractive.

DBAs (outside of employment matters) were introduced in April 2013 as part of the Jackson reforms, but there has been little interest in their use to date within the legal profession, as the 2013 regulations give rise to numerous problems, not least the inability to enter into 'hybrid' agreements, whereby a lawyer could receive a reduced payment as the case proceeds whether the matter is successful or not, with a contingency fee in the event of success.

At present, the contingency fee permissible under a DBA is capped at 25% of the recovered general damages/past losses in personal injury claims, 35% of recovered damages in employment matters and 50% in other cases. These caps, combined with the operation of the indemnity principle, make the use of DBAs unattractive, particularly in personal injury. The inclusion of VAT within the cap in reality reduces the 25% figure to 20.8% and counsels fees are to also come out of that 'pot' of money. Further, there is currently no scope for their use by defendants, in light of the need for the recovery of a payment against which the contingency fee can be calculated.


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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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David Caswell

David Caswell


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