Legal Business Blogs

Reforming the reforms: One-year-on Jackson soundings likely to lead to further calls for overhaul of DBAs

The first year bedding down Lord Justice Jackson’s extensive civil litigation reforms was always going to be challenging, but as the Civil Justice Council (CJC) this month announces a one-year-in soundings process, senior City litigators are expected to call for a radical overhaul of the largely unpopular damages-based agreements (DBA) provisions ushered in by the reforms.

Announced on 13 February, the CJC is inviting written submissions from the legal profession on the ‘practical impact’ of the reforms and will hold a conference in March to discuss the submissions with representatives of stakeholder groups such as practitioners, the judiciary, consumers, major court users and other interested parties.

The CJC is seeking views by 7 March on the types of cases being taken on (and avoided) by law firms; the funding of civil litigation in light of the changes to conditional fee agreements; the introduction of DBAs and qualified one way cost shifting; and experiences of costs budgeting and the management of cases through the courts.

For City litigators the DBA provisions, which entitle a lawyer to claim a percentage of their client’s damages by way of fees, have been the cause of uncertainty, in particular over whether the rules permit a hybrid model, blending reduced fees with DBAs, thereby reducing the costs exposure for both parties.

Several City law firms, including a number of the Magic Circle have already submitted lengthy submissions to the Ministry of Justice calling for a hybrid version of DBAs to be introduced.

The current uncertainty has led to few firms taking up DBAs and one senior City litigator told Legal Business: ‘There is no doubt they have completely screwed up. They know that hybrid DBAs were absolutely central to the whole concept of DBAs that was consulted on and subject to the Civil Justice Council working party chaired by Michael Napier QC. They knew they were supposed to produce regulations that would permit hybrid DBAs.’

However, according to one senior third party litigation funder, addressing DBAs is likely to be pushed back to much later in the year, as amendments to costs budgeting, another Jackson reform under which parties must agree a costs schedule at the outset of litigation, takes a front seat.

For further coverage of DBAs see All or nothing: Only a handful of DBAs entered into as confusion reigns over hybrid model