Ministry of Justice publishes final DBA and success fee cap regulations

Pizza the action: DBA regulations ignore comments from the Civil Justice Council

Signs of life from the Ministry of Justice over getting on with implementing the Jackson reforms emerged yesterday with publication of two draft statutory instruments that will come into force on 1 April.

The date on the secondary legislation laid before Parliament, and subject to its approval, seems to put paid to rumours that implementation could be delayed.

One deals with damages-based agreements (DBAs) and the other the 25% cap on the success fee lawyers can take from personal injury clients’ damages, excluding those for future care and loss.

They follow a consultation carried out in October that also gave practitioners sight of regulations that cover the information that will have to be provided before conditional fee agreements (CFAs) are made, and that dealt with the new part 36 sanctions. Unlike the first two, neither was the subject of statutory consultation and their current status is not known.

The draft Conditional Fee Agreements Order 2013 appears little changed in substance from the consultation proposals, although transitional provisions have been added to make it clear that the cap does not apply to CFAs entered into before 1 April or to a collective CFA under which advocacy or litigation services are provided to a
person in respect of that claim, before the day on which these regulations comes into force. This would prevent a solicitor from signing a collective CFA before 1 April that would capture future cases.

The draft Damages-Based Agreements Regulations 2013 have been reorganised to separate out employment-related cases from all others. The regulations are also now clear that recoverable fees are to be deducted from the contingency fee in all non-employment cases – arguably this was not clear in the October version – and indicates that counsel’s fees are included in the cap on the contingency fee (25% in personal injury cases and 50% otherwise). Counsel’s fees are only outside the cap in employment cases.

However, the Ministry of Justice has ignored several of the comments made on the October draft by the Civil Justice Council, which did much of the spadework on the detail of the DBA rules.

These included concerns that the wording of the damages to which the 25% cap applies – general damages and damages for pecuniary loss “other than future pecuniary loss” – will exclude other heads of damages not linked to future costs and losses, such as aggregated damages where a personal injury arose from an assault and battery.

It suggested that instead the regulations be worded so that the cap applied to all damages except those referable to future loss, adding that the wording – which has been carried through to the final version – “will give rise to actions seeking to establish what ‘future pecuniary loss’ covers”.

See the CFA regulations here and the DBA regulations here.

This article was amended at 5.10pm on 23 January following advice from Kerry Underwood on the CFA transitional provisions