What are DBAs and do they need Re-examination?
Lee Foster, Solicitor and Head of Motor Litigation at Spencers Solicitors.
So, April has arrived and that long-forecasted wave of reform has finally hit British law. Practitioners up and down the country are adapting to change right now and a couple of new legal abbreviations have spawned as a result. Here’s my breakdown of what they mean…
Damage Based Agreements Explained
First of all, let’s look into a descendant of the ‘no win, no fee’ model we’re all familiar with – Damaged Based Agreements (DBAs). The Director of my law firm outlined the acronym’s definition in a recent blog post:
“A contract between the claimant and his or her solicitor, in which the solicitor agrees to be paid a percentage of the damages recovered in the case.”
So, with a DBA the solicitor would have vested interest in the compensation pay-out, instead of claiming fees separately from the losing side; the theory behind this being the lawyer becomes more inclined to get the best pay-out for their client (which I’d argue the best solicitors do this regardless). The government has stamped a 25% cap on personal injury DBA fees, meaning representatives are paid no more than a quarter of the claimant’s total pay-out.
Concern from MASS about DBAs
As with any major change, there has been a certain level of concern from professionals on the frontline of the legal industry. The Motor Accident Solicitors Society has expressed concern about the indirect negative impact this cap could have on ethics in law…
If the lawyer will only ever be paid 25% of the total damages and not according to the amount of hours invested into the case, it could urge practitioners to settle claims as early as possible. This takes away from the ethical duty a personal injury solicitor has to their client, as rushing a case will likely result in an under-settlement, through inadequate representation.
This reason alone gives cause for concern and so it’s understandable why some UK lawyers still have their reservations about DBAs.
What we are doing instead…
Conditional Fee Agreements (CFAs) are slightly different and more rigid as a claims model in my opinion. Solicitors are free to charge ordinary rates as well as attach a ‘success fee’ if they win the case.
Before the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act this success fee was recoverable from the losing party, now it is taken from the client’s compensation.
Still, the CFA is more ideal as solicitors are paid according to the hours they put in and rewarded for delivering results. It remains akin to the ‘no win no fee’ model and all parties can benefit.
CFAs were first introduced in the ‘90s and although they have now been modified by LASPO, to me, they are more reliable than the fresh-faced DBA – which could do/have done with further assessment before adoption en masse.
About the Author
Lee Foster is a Solicitor and Head of Motor Litigation at Spencers Solicitors. A lawyer with over twelve years’ experience in personal injury litigation with an extensive background in road traffic accidents and industrial disease claims. Lee has been involved in a number of high profile Court of Appeal cases including ground-breaking litigation in the fields of industrial deafness and solicitor’s negligence. Lee is a Law Society PI Panel Member, Deputy Regional Co-ordinator ofMASS and an APIL Senior Litigator.