Lord Dyson, the Master of the Rolls, has expressed his disappointment after the Ministry of Justice (MoJ) announced that it had “ruled out” the introduction of hybrid damages-based agreements (DBAs).
Lord Justice Jackson has led calls for hybrid DBAs, in which some fees are paid on a traditional basis with the rest at risk under a DBA, to be allowed.
The lack of clarity in the DBA Regulations over whether they were lawful has been criticised by lawyers and funders, but despite evidence of very low take-up, a spokesman for the Judicial Office said “the government has ruled this out as it considers such arrangements could encourage litigation behaviour based on a low risk/high returns approach”.
Instead the MoJ has asked the Civil Justice Council (CJC) to set up a working group to look at “technical revisions” to the DBA regulations as anecdotal evidence points to little take-up of ordinary DBAs as well.
The working group, to be chaired by Professor Rachael Mulheron of Queen Mary University, London, will look at how to separate employment tribunal regulations on DBAs from regulations for civil litigation proceedings.
It will consider how to clarify that different forms of litigation funding cannot be used during a case when a DBA is being used and review whether the regulations should contain provisions on terminating DBAs.
The spokesman said it would also look at changing the regulations so that defendants can use DBAs, by widening the application of the regulations where the party receives a specified financial benefit (rather than restricting them to receiving a payment).
The working group has been given the further task of clarifying that the lawyer’s payment can only come from damages, and the payment should be a percentage of the sum ultimately received rather than awarded or agreed.
Lord Dyson said: “While I am disappointed that the government has decided not to permit hybrid DBAs, the CJC will – as ever – seek to assist and review the regulations in the areas suggested, and in the light of experience.”