Damages Based Agreement (DBA)

A Damages Based Agreement (or DBA) is a type of contingency fee arrangement where the fee charged by a solicitor or barrister is calculated as a percentage of the damages recovered by the claimant in successful proceedings.

DBAs were introduced in 2013, through the Damages Based Agreements Regulations 2013.

Law firms have been slow to adopt DBAs this form of fee arrangement is still much less common than bills based on hourly rates.

Fieldfisher was one of the first UK firms to offer DBAs, recognising them as an innovative funding solution which should be an option for clients.

A DBA may be the best option for you, if:

  • You want the certainty of legal costs aligning with damages, including no fee being payable in the event of a loss.
  • You want your legal team's remuneration to be more closely aligned with your case outcome.
  • You want a flexible funding arrangement whilst avoiding the need to involve third party funders.

If the value of your claim, the likely costs involved and the prospects of success are suitable for a DBA, we will be happy to consider this with you as a litigation funding option.

Conditional Fee Agreement (CFA)

A Conditional Fee Agreement (CFA) is an agreement between a lawyer (solicitor or barrister) and client where the lawyer agrees to work for a reduced or no fee.

If the case succeeds, fees are charged at standard rates with an agreed percentage uplift (the success fee).

If the case fails, only the reduced fee (or no fee) is payable.

Where no fee is payable in the event of a loss, this is sometimes referred to as a ‘no win no fee’ agreement.

The success fee element is not a ‘recoverable cost’ – i.e., the extra amount owed to the lawyer if they win cannot be added to the other side's legal costs.

The success fee is therefore payable by the litigant.

Third Party Funding (TPF)

Third party funding (TPF) is an arrangement where a professional funder agrees to fund the costs of litigation with a view to receiving a return if the case is successful.

If the claim is unsuccessful, the funder receives nothing and will have lost the investment.

Litigation loans are provided by specialist financers.

Money is advanced as required (usually up to an agreed cap) to assist with funding the litigant's own costs and disbursements.

The financer will, in most cases, charge interest based on the amount of time money has been advanced for.

Litigation loans can either be recourse (meaning you pay back whether you win or lose) or nonrecourse (meaning you don’t pay anything back if you lose). 

Insurance (BTE/ATE)

Insurance falls in to two categories:

  1. Pre-existing insurance (known as Before the Event Insurance or BTE);
  2. Insurance purchased in respect of a specific piece of litigation (known as After the Event Insurance or ATE).

Insurance is predominantly used to insure against the risk of having to pay the other side’s costs if you are unsuccessful.

It can however, in certain circumstances, extend to own costs and own disbursements.

There is usually a set amount covered (referred to as a limit of indemnity).

For BTE, a premium will already have been paid for the policy (perhaps as part of your wider business or personal insurance arrangements).

For ATE, a premium will be charged. That premium is usually payable at the conclusion of a claim and only in the event of success.

The insurance premium is not a recoverable cost (so cannot be added to the other side's legal costs if they lose the case).

 

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