With the Jackson reforms recently instigated, the market is divided about how the introduction of damages-based agreements (DBAs) will impact the litigation market.
Under the reforms, which came into effect on 1 April, litigators will be allowed to accept cases under DBAs for the first time. However, litigators say the lack of clarity about how the new rules work will inhibit their use.
Annabel Thomas, partner at Enyo Law, said: ‘It is difficult to say how DBAs will impact the market at this stage as it’s unclear whether litigators can enter into partial or hybrid DBAs. As far as we can see, we cannot, which significantly limits its use because the risk with a full DBA is too high, so anyone entering into a DBA has to be very careful.’
Litigators will be able to claim up to 50% on damages under the new rules. However, some feel this cap is self-limiting for both the firm and the client.
Herbert Smith Freehills commercial litigator Anna Pertoldi said: ‘There is no need for a 50% cap on commercial cases because larger companies are capable of negotiating this themselves. This is limiting for the client, as the firm will have to weigh up risk against benefit and if the risk is big, then a 50% cap may be insufficient.’
Furthermore, some advocates oppose the reforms arguing they will compromise professional independence. ‘Barristers have a duty, not just to the client but to the court as well. Cases should be won without barristers thinking about their financial stance,’ said Jonathan Hirst QC, joint head of Brick Court Chambers.
‘The risk with a full DBA is too high, so anyone entering into a DBA has to be very careful.’
Annabel Thomas, Enyo Law
While the DBA regulations came into force on 1 April, the Bar Council called for an amendment order in February to correct a number of deficiencies in the conditional fee agreements (CFA) order and DBA regulations.
The regulator is claiming that rules in their current form will undermine Lord Justice Jackson’s recommendations and reduce access to justice.
Mark Friston, vice chairman of the Bar Council’s remuneration committee, said: ‘Changes as far reaching as the Jackson reforms could and should be made in a way that gives businesses time to adjust to the all-important details. If the reforms are to work well, then practitioners’ texts will need to be rewritten, software will need to be updated, and barristers will need to explore and learn about their new environment.’