Q&As

What are the rules governing the enforceability or otherwise of a damages-based agreement (including restrictions on ‘hybrid agreements’), where it applies to the litigation only up to the point of judgment and thereafter the fees and costs associated with any enforcement measures are payable separately on an hourly rate on a standard retainer?

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Produced in partnership with Alex Bagnall of Total Legal Solutions
Published on LexisPSL on 23/08/2019

The following Dispute Resolution Q&A produced in partnership with Alex Bagnall of Total Legal Solutions provides comprehensive and up to date legal information covering:

  • What are the rules governing the enforceability or otherwise of a damages-based agreement (including restrictions on ‘hybrid agreements’), where it applies to the litigation only up to the point of judgment and thereafter the fees and costs associated with any enforcement measures are payable separately on an hourly rate on a standard retainer?
  • Legislative background to DBAs
  • Compliance with the DBA regulations
  • The effect of a non-compliant DBA
  • When might a DBA be non-compliant?
  • Alternative solution

What are the rules governing the enforceability or otherwise of a damages-based agreement (including restrictions on ‘hybrid agreements’), where it applies to the litigation only up to the point of judgment and thereafter the fees and costs associated with any enforcement measures are payable separately on an hourly rate on a standard retainer?

Legislative background to DBAs

The legalisation of damages-based agreements (DBAs) in contentious business was one of the recommendations made by Sir Rupert Jackson as part of his review of civil litigation costs.

DBAs became lawful on 1 April 2013 through section 45 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which amended section 58AA of the Courts and Legal Services Act 1990.

Unfortunately, the subordinate legislation which regulates DBAs has led to uncertainty regarding their enforceability. This has led to calls from the Civil Justice Council, the Law Society and the Bar Council to reform the scheme. For this reason, DBAs are a rarely-encountered funding arrangement.

Compliance with the DBA regulations

In order to be enforceable, a DBA must comply with the Damages-Based Agreements Regulations 2013 (DBA Regs 2013), SI 2013/609.

All DBAs must comply with DBA Regs 2013, SI 2013/609, reg 3, which requires a DBA to specify:

‘…(a) the claim or proceedings or parts of them to which the agreement relates;

(b) the circumstances in which the representative’s payment, expenses and costs, or part of

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