Clients previously willing to pay lawyers by the hour are now looking at damages-based agreements (DBAs) in light of the coronavirus crisis, a leading City law firm has claimed.
Fieldfisher said it had seen a spike in enquiries about risk sharing in the last fortnight.
Dispute resolution partner Tony Lewis made the claim as he announced what he said was the first insurance deal to cover a portfolio of DBA cases, rather than single-case cover.
This is cheaper and so allows Fieldfisher to offer more competitive deals. Mr Lewis said it provided a “real challenge” to litigation funders.
It forms part of FeeSolve, the firm’s litigation funding proposition, which was launched a year ago and which Mr Lewis heads.
The unnamed insurer has agreed to pay a proportion of Fieldfisher’s unbilled work in progress and disbursements at the end of the case if it does not succeed.
Mr Lewis said the positive experience from working on a small number of DBAs last year meant the firm has a “much bigger appetite” this year – although the limit on the portion of turnover that the firm was prepared to be contingent meant “we will reach capacity quite quickly”.
He suggested that third-party funding has to date been “the preserve of impecunious”, but particularly in light of the Covid-19 pandemic, businesses that were previously prepared to pay their lawyers because they did not want to share any damages awarded were now looking to share the risk.
He added that the possible reform to the DBA regime put forward by Nick Bacon QC and Professor Rachael Mulheron’s independent review last year would drive more business by helping to establish it as a credible form of funding.
Though Fieldfisher does not use the hybrid DBA model that their proposals would unlock – it offers a full ‘no win, no fee’ – their moves to open up DBAs to non-monetary claims and acting for defendants would help Mr Lewis said.
He said the biggest challenge to adopting DBAs has been persuading the partnership, given the contingent nature of the income, but Fieldfisher’s unusual history – for a large City firm – of handling clinical negligence work meant it has “a culture which understands that contingent work can be decent work”.
Mr Lewis explained that the firm has restructured to provide an unbiased and independent assessment of the chance of winning, the likely costs to the firm and the wider picture of contingent work being handled.
“The contingency committee meets every month to review the level of contingent cases across the firm, review and approve new CFA or DBA cases and to consider the extent to which the firm’s fees and disbursement outlay that are at risk should be insured.”
The committee consists of managing partner Michael Chissick; finance director Mike Giles; Paul McNeil, head of personal injury and medical negligence; senior partner David Wilkinson; and Colin Gibson, head of dispute resolution.