MoJ considering improvements to damages based agreements system
The Ministry of Justice (MoJ) has indicated it may change course on damages based agreements (DBAs), following a barrage of criticism from the profession.
DBAs, introduced on 1 April, replace the old system of conditional fee agreements. They allow lawyers to bring litigation and arbitration on a contingency fee basis, taking up to a 50% share of general damages, or a 25% share in personal injury and clinical negligence claims.
General damages have been increased by 10% to help balance the burden, as recommended by Lord Justice Jackson.
One of the criticisms of the new DBA regulations is that they do not allow partial or “hybrid” DBAs, where the lawyer could offer a reduced hourly rate in return for a contingency fee if the case succeeds. Concerns have also been expressed about the fact solicitors will be out of pocket if the defendant does not pay up, as well as the workability of the scheme in financial terms.
On Wednesday (24 April), the MoJ appeared to confirm mounting speculation that it is considering amendments.
An MoJ spokesperson said: “The Damages Based Agreements Regulations came into effect on 1 April and will allow for damages-based agreements to be used for the first time in civil litigation.
“We are now considering suggestions which have been put to us for ways to further improve the system.”
Professor Dominic Regan says: “The patent failing of the Regulations is to preclude the client and solicitor from agreeing a hybrid arrangement with some payments being made for work as the matter proceeds.
“This was never the intention of Lord Justice Jackson. The MoJ is to be congratulated for realising that there is a fundamental problem with the present Rule.”
