Damage-based Agreements (DBA)

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A damages-based agreement (DBA) is a form of “no-win, no fee” agreement between a lawyer and client, under which the lawyer is paid an agreed proportion of the sums the client recovers in litigation.

This kind of arrangement is perhaps more often described as a “contingency fee”, but in England and Wales that term would also cover a “conditional fee agreement”.

Until recently, English law only permitted DBAs in relation to non-contentious transactional matters and proceedings before employment tribunals but, from 1 April 2013, they are now permissible in relation to proceedings before the English courts.

In commercial cases, the payment a lawyer may agree to receive under a DBA will be subject to a cap of 50% of the sums recovered by the client. Different caps apply to other types of cases.

The liability of an unsuccessful party to pay the costs of an opponent, which has entered into a DBA, will continue to be calculated in the usual way i.e. based on the lawyer’s hourly rates. If the recoverable costs so calculated are lower than the amount that the successful party owes its lawyers under the DBA, the successful party will have to fund the shortfall. However, if the costs calculated on an hourly rate basis are higher than the amount due under the DBA, the recoverable costs will be limited to the amount due under the DBA.

 

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