Damages Based Agreements Regulations 2013
Damages Based Agreements have been introduced by the Government which will come into force on the 1st April 2013 which permit solicitors to enter into agreements with their clients that they will be paid based on the level of damages recovered for their clients. The agreements are referred to as damages based agreements or “DVA”.
DVAs are a type of no win no fee agreement under which your representative providing advocacy services, litigation services or claims management services can recover a percentage of the client’s damages if the case is won but they will be paid nothing if the case is lost.
The Regulations differ depending upon the type of case you wish to pursue.
In the case of commercial litigation the amount of the percentage of damages a representative can agree to receive shall not exceed 50% of the amount recovered by the client. The 50% cap in respect of the fee that can be charged includes VAT.
The amount of the payment including VAT must not be greater than 35% of the sum ultimately recovered by the client in the proceedings or the claim. The Regulations specify information that a representative must provide before a DVA is made in respect of an employment matter.
After the 1st April 2013 Clarkson Hirst will enter into DVAs with their clients subject to prior approval.
We consider it important that other methods of funding your case are explored before you enter into a DVA. You may have other ways of funding a case such as through legal expenses insurance that would avoid the need for you to give up a percentage of your claim.
Further I anticipate there will be circumstances where it would be more cost effective to employ our firm on a private hourly rate basis than through a DVA. This would include in particular high value claims.
Further in non personal injury matters DVAs do not provide any insurance against having to pay your opponent’s legal costs if the case is lost. We at Clarkson Hirst can apply for insurance cover to cover you against the cost of your opponent if a case is lost.
Our overall view is that DVAs could be a good way of pursuing a claim in the following circumstances;
No alternative method of funding the case is available Private funding is not available or the client would prefer not to pay The client is ready and willing to give up a percentage of their damages if they win The client has good prospects of success
If you would like to discuss an employment law or commercial litigation case then please contact our Senior Director, Matthew Winder on 0800 919 231.
Please note this document is for information purposes only and should not be relied upon for the purpose of taking legal advice or in any Court proceedings. You should take legal advice on any case before proceeding.
Clarkson Hirst Solicitors