The Law Society has broadly welcomed efforts to encourage the use of damages based agreements, although the support is caveated with pleas to iron out some technical issues.
New regulations were drawn up earlier this year following an independent review of the current DBA rules commissioned by the Ministry of Justice.
The redraft moves from the so-called Ontario model to a success fee model, meaning recoverable costs are no longer within the DBA cap. The cap itself would be reduced from 50% to 40% and from 25% to 20% in personal injury. Under the Ontario model, solicitors retain the recoverable costs and can make up the shortfall to reach the cap from clients’ damages. Under the success fee model, solicitors can retain recoverable costs but can also receive the whole capped contingency fee from damages awarded.
The Law Society acknowledged in its response to the proposed regulations that some of the ambiguity holding back solicitors from using DBAs has been removed. It backed alternative mechanisms for achieving access to justice, which include DBAs, provided they do not substantially undermine other available methods of funding.
The Society said: ‘The draft DBA regulations should increase access to justice enabling solicitors to offer more litigation services to a wider group of clients.
‘Consumer protection needs to be carefully considered to ensure the correct balance is achieved between allowing innovative funding methods to increase access to justice whilst avoiding the potential for abuse.’
On hybrid models, the Society said many clients and solicitors, particularly in commercial/business disputes, are interested in a funding arrangement whereby they pay a discounted hourly rate whilst the case proceeds and regardless of the outcome.
The Society stated this is a relatively simple concept to explain to clients, and they end up paying an understood and agreed sum out of the damages.
But the solicitors’ representative body said it was still unclear what reasons are acceptable for setting the payment at the level agreed. It also asked whether independent advice should be encouraged for a client making the difficult choice between a CFA and DBA.
DBAs were proposed as a funding option by Lord Justice Jackson as part of his review of civil justice and were introduced in 2013. But since then take-up has been low largely due to technical issues with the regulations.
Professor Rachael Mulheron and Nicholas Bacon QC are expected to release a supplementary report based on feedback they have received. The Society urged the government to consult on the work of the DBA reform project.