Lord Jackson in favour of hybrid DBAs

On 20 October, Lord Justice Jackson delivered the Keynote speech at the Law Society Conference 'Commercial Litigation: the Post Jackson World'. In his speech, he sought to address two areas he considered had suffered during the implementation of the Jackson Reforms and which he felt were of particular interest to commercial lawyers. These were DBAs, where he came out in support of introducing hybrid DBAs, and Relief from sanctions where he stated that he 'loyally' stood by the majority decision in Denton.

In relation to DBAs, he concluded that the problems with DBAs remain and that it 'now needs serious attention'.  He referred  to the fact that the Government is re-looking at the DBA regulations and expressed a hope that the proposed changes will be subject to a consultation process to give practitioners an opportunity to comment on the changes.

Hybrid DBAs, or rather the lack of, are perhaps the most controversial aspect of the DBA regulation. While the Government's stance is that it needs to be persuaded that there is a good reason for having hybrid DBAs, Jackson is convinced that there is. He sets out eight reasons as for the need for the inclusion of hybrid DBAs in the regulation. In summary:

  1. they are particularly suited to commercial litigation. Lawyers may well be willing to work for a reduced fee and if the client agrees then they should be allowed to proceed on that basis
  2. they do not contain the objectionable features of CFAs ie the successful party will recover the same costs from the other side whether or not they are covered by a hybrid DBA - there is no recovery of success fees.
  3. hybrid DBAs are allowed in Canada and have been seen to substantially extend access to justice
  4. hybrid DBAs are allowed in other jurisdictions. In the Netherlands they are in fact the only type of DBA allowed
  5. DBAs should logically have the same flexibility as CFAs
  6. third party funding proceeds on a hybrid basis with the funder meeting some or all of the litigation costs of an unsuccessful party. it is therefore illogical that the regulation does not allow hybrid DBAs
  7. although there is a fear that hybrid DBAs will encourage weak and speculative claims, the opposite is in fact the case. Solicitors and clients are unlikely to invest in a case they do not have a good chance of winning
  8. hybrid DBAs would promote access to justice

There remains an element that object to hybrid CFAs being introduced. Jackson takes the stance that that element is the one that opposes the use of DBAs ie those that are on the receiving ends of claims which would be funded by them as well as insurers. He is very firm in his view that there is a need to stand firm against such powerful vested interest and he suggest that commercial lawyers should set up a working group to:

'(i) to analyse the numerous matters of detail on which there is concern and

(ii) to assemble the evidence and make out a case for hybrid DBAs.

It may be sensible to investigate the position overseas in greater detail than I have done in this paper and to undertake some market research. If recommendations for reform are to carry weight, they need to be evidence based.'

Lord Jackson also noted that he was still of the view that the indemnity principle should be abolished; this was a recommendation which he put forward in his Final Report but which was not implemented. In his view it no longer serves any useful purpose, rather it results in 'futile' satellite litigation. He hopes that its abolition might be considered again alongside review of the DBA regulations.

Lord Jackson's full speech is available here.

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