3 August 2012Print This Post

Caps under scrutiny as CJC working party unveils contingency fee recommendations

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Disputes involving larger businesses should be the only category of case not subject to a cap when contingency fees are introduced, a Civil Justice Council working party has said as one of 18 recommendations on how the new scheme should operate

A report issued today also said that lawyers working on contingency fees – formally called damages-based agreements (DBAs) – in personal injury cases should be able to calculate their fee from the total damages figure, including future loss

This runs contrary to the government’s intention, which is to limit it to the sum recovered for past losses and general damages

DBAs – which are being introduced next April as part of the Jackson reforms – will still involve cost-shifting, with the losing party paying costs in the normal way and the client topping up the contingency fee from their damages as required, subject in most cases to a cap

The working party said the cap in personal injury cases should be 25%, excluding disbursements and after-the-event insurance premium

Commercial cases are “likely to involve sophisticated purchasers of legal services entering into contractual arrangements where freedom of bargaining should not be inhibited”

However, the working party was split on whether there should be a cap on cases involving consumers and micro-enterprises (fewer than 10 employees and a balance sheet that is less than €2m); if there is to be one, it should be 50%

The working party recommended retaining the 35% cap for employment tribunal cases

Its report said a particularly difficult issue was whether recovered costs should be take

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