The government is now well on its way towards introducing damages-based agreements, which will be served up to litigants from a new menu of funding options next April.

It issued a draft version of its DBA regulations nearly two months ago, and after inviting comments during a three-week period, is now in the process of ‘revising’ them, and promises to publish the final version ‘shortly’ – the Ministry of Justice could not give me any more detail on the timings.

As it stands, the government does not plan to oblige solicitors to ensure their client has achieved independent advice on the funding agreement, which goes against Lord Justice Jackson’s original recommendation in his 2010 final report.

Do clients need independent advice on their contingency fee agreement? There is no requirement for this when they are entering into a conditional fee agreement in the current regime. Plus there are some pertinent practical questions, such as where precisely will they find this separate advice – presumably, one of the original law firm’s competitors – and who will pay for it; will it simply ramp up costs for the client?

But under the new regime, the greater choice in funding options will mean greater temptations for the solicitor. A case that is likely to settle early, for example, is likely to be a lot more lucrative under a DBA than a CFA. Solicitors have an ethical duty to act in the best interests of their client, but is that enough?

From the lawyer’s perspective, the fact that clients will not be forced to get a thumbs-up on the funding arrangement from an impartial source before they can sign on the dotted line, does seem like a good thing. But without that requirement, firms may find themselves on the receiving end of legal actions for negligence or breach of fiduciary duty if the firm appears to have cashed in to the detriment of their client.

No doubt those firms interested in taking up DBAs are already at work devising some clever wording to be inserted into their DBA agreements, in an attempt to fend off precisely these kind of actions. But once DBAs are in place, litigation over the deals done and agreements reached is an inevitable aspect of the new post-Jackson world; albeit not one that was ever intended.

Rachel Rothwell is editor of Litigation Funding magazine, providing in-depth coverage on costs and the financing of litigation.

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