England embraces contingency fees
Litigation funding rules in England and Wales changed radically 6 months ago enabling lawyers to share to a greater extent than ever before the costs risk of litigation with their clients. Until the reforms took effect on 1 April 2013, the types of fee arrangements litigators could offer their clients were very limited due to the sever restrictions imposed on the use of contingency fees, which were considered to breach the rules against champerty and maintenance.
With those restrictions now lifted, English litigators are able to offer a variety of funding arrangements to suit their clients' needs. Contingency fee arrangements where the fee charged by the lawyer is calculated as a percentage of damages recovered are known in England as "Damages Based Agreement" or "DBA". Previously prohibited in most types of contentious proceedings, DBAs can now be used for the first time in commercial litigation. There is another form of contingency fee known as "Conditional Fee Agreement" or "CFA" where legal fees are charged by reference to the time spent, but the lawyer agrees to work for a reduced or no fee if the case fails, and for a higher fee if the case succeeds. CFAs have been permitted for a number of years but are still infrequently used in commercial litigation.
Whereas contingency fees have been part of the litigation landscape in the US for a long time, they are only slowly being embraced on this side of the Atlantic. Although the demand from commercial clients for greater choice, cost savings, costs certainty and cost risk sharing in litigation has been steadily increasing over the past several years, few law firms are as yet prepared to offer contingency fees.
We at Fieldfisher in London not only recognise that costs are a major factor in any dispute and adopting the right funding solution is an essential element of successful litigation, but we are also prepared to share some of the risk of litigation with our clients.
Where America leads we follow! In response to the demand from clients and to changes in the market, we have launched FeeSolve – a unique and innovative risk management and funding package for commercial claims. FeeSolve is designed to give clients certainty in relation to costs and to reduce the financial risks faced by our clients when bringing a claim by offering a variety of alternative funding arrangements. Choosing the right funding option for their cases enables our clients better to manage their cash flow, reduces pressure on their budgets and removes some of the inherent risks of litigation which in turn enables our clients to negotiate from a position of strength.
More information on FeeSolve can be found in this brochure.