Burford bids to bypass uncertainty in DBA regulations with ‘hybrid’ product

Clark: firms can calibrate the exact amount of fee risk they take on

Burford Capital yesterday formally launched its ‘hybrid DBA’ that enables law firms to use damages-based agreements without the risk of falling foul of the regulations which govern them.

As first revealed by Legal Futures last month, the funder has looked to address the concern that the DBA regulations as drafted do not allow hybrid agreements which mix hourly rates and a contingency element.

Burford UK CEO Andrew Langhoff said: “We believe our new product will unlock the log jam this regulatory uncertainty has created.”

At the core of the arrangement is a standard non-recourse litigation case funding agreement between the law firm’s client and Burford. The law firm and client have a regular retainer on an hourly basis. Then the law firm and Burford enter into an agreement that sets out the ongoing payment terms for the firm as well as the portion of the damages award that will go to the firm in the event of success.

The key is that this sum comes from the proceeds initially collected directly by Burford.

Burford said the hybrid DBA has been fully reviewed and approved by external legal and compliance experts. A condition is also that the details are shared with the client.

Ross Clark, chief investment officer of Burford UK, said: “What is especially appealing about this product is the law firm’s ability to carefully calibrate the exact amount of fee risk it seeks to take on. This allows the firm to hedge its risk and even take on a broader portfolio of such cases – all while continuing to receive regular discounted fee payments.

“And of course, the arrangement is made transparent to the client, who must be supportive of the damages-sharing arrangement.”

Burford said the product would help those firms that are looking to take on litigation risk as a means of staying competitive and increasing their profitability.

The government has yet to announce whether it will make any changes to the regulations as a result of the uncertainty over hybrid DBAs, although yesterday we reported Professor Dominic Regan's prediction that it will.