So, nearly two months on from J-Day, has any brave soul attempted to do a damages-based agreement (DBA) yet? Thought not.
The only one I have heard about was mentioned by a delegate from a large national firm at a Westminster Legal Policy Forum event the other week – and he said that it was only after having actually tried to set up a DBA that he realised the true extent of how terrible the DBA Regulations really are. I believe he abandoned the attempt.
DBAs are not expected to be taken up much in personal injury – the way the rules work out, they have ended up as ugly friend to the altogether more attractive conditional fee agreement.
But what about in commercial? Here, DBAs were supposed to be adding to the smorgasbord of mouthwatering funding arrangements intended to tempt the palates of different types of clients, depending on their appetite for risk-sharing with their lawyers. But the way the rules have been drafted has turned the stomachs of the solicitors.
Now, at least, the Ministry of Justice is finally on the case. It knew about the problems with the regulations before it laid them before parliament, of course, but it was already too late (because of parliamentary timings) to do anything about them. Now, officials have begun meeting with litigation stakeholders and experts with a view to amending the rules – and this time, getting it right.
Despite the false start, hope is beginning to circulate among some in the commercial litigation sector that this second draft of the regulations may ultimately work to lawyers’ advantage; because, having messed up so impressively the first time round, this time the MoJ may actually listen to those who know what they’re talking about.
One of the big issues with the Regulations is the total confusion over whether or not they actually allow ‘hybrid’ DBAs, whereby a DBA is combined with another method of funding, such as a reduced hourly rate. One industry stakeholder who met with the MoJ last year, before the Regulations were produced, said an official had told him the rules would allow a ‘partial DBA’, which would be the equivalent of the arrangement allowed under a partial CFA. But that is far from clear from the rules that were produced.
As the MoJ now focuses on the hybrid question in particular, commercial litigators are pushing hard for the greatest flexibility possible to be built into the rules – in an unambiguous way. It could be that the end result is even more flexible than what had originally been intended. Proponents of the flexible approach also have the backing of senior figures including Mr Justice Ramsey, who - as we report in the June edition of Litigation Funding - recently spoke out in favour of a range of ways in which DBAs could be part of a combined arrangement.
Those in the know tell me that the amended DBA Regulations are unlikely to come into being before October. But the signs are that they should be worth the wait.