The rules on damages-based agreements (DBAs) should be changed to free up solicitors to offer a mixture of contingency fees and hourly rates in commercial cases, the judge in charge of Jackson implementation said this week.
The current DBA regulations currently prohibit such hybrid or partial DBAs, but speaking at an IBC Legal conference in London, Sir Vivian Ramsey, who sits in the Technology and Construction Court, said his personal view was that the marketplace should decide and that a change was “under active consideration”.
The Ministry of Justice is thought to believe that allowing firms to take a percentage of damages on top of hourly fees would amount to a “charter” for them to treat it as a “bonus” that would ultimately push up litigation costs. It is, however, reviewing the DBA regulations already.
Ramsey J said that in his view it was right that solicitors should be able to use “time and rate up to a certain stage” in a case – for instance up to trial – and then “take a percentage of the winnings” after that. Other formulations could include recovering low base costs if you lost.
“I think there are two viewpoints… one is that the concern is that it may just become a bonus… if solicitors say ‘we’ll take our base costs plus 20% of damages’, there is a concern that this will be a charter for solicitors just to charge their normal rates and take the 20% as a bonus, therefore driving up costs.
“On the other hand… if one looks at, for instance, litigation funders who aren’t subject to limitations, should the market place, particularly for commercial DBAs, come in, [meaning] one should be able, as a solicitor and a client, on a commercial case to set [the] arrangement you want to have; a DBA for part of it… or whatever you like.”
The judge said his “personal view” was that the “free market should probably come in” although he agreed that a ban on hybrid DBAs in employment and personal injury cases should remain. He added: “I think one perhaps should be looking more widely at the availability of DBAs as commercial arrangements elsewhere.”
However, leading costs specialist barrister, Nick Bacon QC of 4 New Square chambers, who chaired the conference and is a member of the Civil Procedure Rule Committee, predicted that there would not be a change to the DBA rules until next April.