29 April 2020

Funding Litigation: Damages Based Agreements

I have read a number of articles recently about firms seeking to offer their own funding solutions to clients such as Damages Based Agreements (“DBA’s”). We have been pioneering DBA’s since 2013, long before most lawyers would consider them, indeed they are still not commonly available in the legal market.

DBA’s are a great tool for solicitors and clients. DBA’s are no-win, no-fee agreements where the solicitor is entitled to a percentage of what they win for the client.

They give the opportunity for the firm to fund the client’s litigation without the need for the client to go to third party funders. We identified as far back as 2013 that many clients with commercial disputes no longer wanted to pay the traditional hourly rate or even fixed fee. They wanted the solicitor to take some risk and if the solicitor is successful then the solicitor gets reward. Many solicitors are not willing to take this risk but we have always been open minded about it. It has led to great success for both us and our client’s.

One of the most successful parts of a DBA is that the solicitor and the client are “in it together”. They win and lose together. We have found over the years that the client really appreciates this and it leads to a strong client-solicitor relationship.

As we have been at the forefront of firms offering DBA’s for so long, we have developed what we consider is a unique offering.

Usually on a DBA the client is liable for all disbursements other than barrister’s fees, such as court fees, expert fees and data room fees. If the client wants those funded, they ordinarily need to seek external funding which adds extra cost to the client if they win. We can often provide an all-in solution where we will arrange to fund all disbursements meaning that the client is entirely de-risked in respect if its own costs because if we take the case on this basis, the client really does pay nothing. We only recover the disbursements if the client wins.

A DBA also usually is done hand in hand with an insurance policy covering the client from any adverse costs should the claim not succeed. This premium is often also able to be sourced on a no win – no fee basis so is only payable when the client succeeds in the claim.

If we think the case may be suitable for such an arrangement, we will first need to obtain an opinion from external counsel, but as long as we consider it is a case which has potential for a DBA then we will do the work to get counsels opinion at no cost, but the opinion itself would ordinarily be funded by the Client. In short, we are willing to take risk as to our fees from the very beginning.

We have a team of excellent litigation solicitors who are technically strong, tactically excellent, client focused and hard working. Clients have had great results after instructing us on a DBA basis and it has proved an extremely successful and popular model with those clients. We have shared the risk and the gain, which suits the client’s commercial objectives and approach.