Solicitors can now run damages-based agreements on a ‘no win, low fee’ basis following the Court of Appeal’s ruling in Zuberi v Lexlaw, a top costs QC confirmed last week.
Nicholas Bacon QC, who acted for the Bar Council as intervener in Lexlaw, said the ruling would allow ‘greater flexibility’ in DBA arrangements, which is what the government had wanted.
He said: ‘Any solicitor doing DBA work should certainly include provision now in the agreement that allows them to be paid something for the case if the client terminates the agreement, or the client breaches it. That is solid, sound, safe territory now… But those who are more adventurous, who might well be doing a whole basket of DBA cases, may well want to put in a clause that says, “if we lose, we’re going to be paid, say, half an hourly rate or a discounted fee”, on the back of that judgment’.
Bacon noted that Lord Justice Newey had given a dissenting view in Lexlaw. He said: ‘Lord Justice Newey took the view that a damages-based agreement was really an all or nothing agreement, so you either win and get paid, or you lose and get paid nothing. Whereas the majority decision was that no, it’s not as simple as that; there’s nothing to stop a solicitor from being paid something, by way of an hourly rate, for example, if there was a loss.
‘And if that’s right, which on the face of it it is, it’s a good sensible decision, because it allows greater flexibility with the use of these agreements, which is what I understood that the government intended them to be for: to give greater access to justice.’
Bacon, who was speaking at the Costs Law Reports virtual conference, added: ‘Lord Justice Newey was really concerned about overcharging… but there are plenty of opportunities for judges to [deal with] overcharging at various stages of a case: whether it’s budgeting, costs assessment, Solicitors Act assessments, or professional negligence claims. So there’s lots of protection there.’