Sometimes known as “DBA Insurance”, this is a product purchased by law firms.
Contingency fee arrangements or Damages Based Agreements (DBAs) are very popular with clients but law firms have traditionally been nervous about the downside risk involved despite the increasing pressure to remain competitive and offer such arrangements to corporate clients.
DBA insurance means a fee earner can demonstrate to their risk committee and/or financial controllers that they will ultimately realise a minimum amount of their time recorded on a matter (e.g. 50%, even if the case fails completely). At the same time, the law firm could benefit from a share of the client’s recovery which can lead to a greater realisation for the firm than might be achieved through a standard billing arrangement or even a Conditional Fee Arrangement (CFA).
– Justin D’Agostino, Global Head of Practice, Herbert Smith Freehills
A similar insurance product, “CFA Insurance” can be purchased to underpin a CFA depending on the precise economics of the case.
When it comes to alternative fee retainer models, we have extensive experience in tailoring solutions to meet the needs of the law firm and claimant.
This could mean a variety of different products are used in conjunction to achieve the desired goal. For example, we might arrange DBA cover to insure a portion of the law firm’s fee risk, adverse cost insurance for the claimant, as well as work with Erso Capital to finance the disbursements in the case – effectively four different stakeholders brought together to achieve the desired goal.
We strongly recommend an early-stage discussion in order that the various options can be considered. Different combinations of alternative fees, insurance and finance will result in different financial outcomes.
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