The Game is Changing – DBAs are on the rise with city lawyers

In 2017 TheJudge designed and launched a new insurance product, DBA Insurance, specifically with the aim of overcoming many of the previous barriers to entry faced by commercial litigators when considering Damages Based Agreements (DBAs). The launch was reported widely in both the UK and in respect of the US version of the product , Attorney Fee Insurance in July last year.

The genesis for these products was that we knew litigators both in the UK and US were witnessing (with a degree of envy) the significant returns being yielded by litigation funders. We were confident that ultimately law firms would want to respond and find ways of keeping those gains within the law firm, given, ultimately, the law firm is the party doing the work.

It transpires that we were on the money, so to speak, as demand is proving popular on both sides of the Atlantic and what is more the quality of the cases is high.

What is DBA insurance –A Quick Recap

DBA insurance provides a law firm with the necessary comfort that they are capping their downside risk when acting on a contingency fee basis. This means firms can have the comfort that even in a lost case outcome, they will still achieve a certain fee realisation on their DBA cases.

A key feature of this insurance is that insurers are only paid a premium if the case is successful and the law firm has successfully collected its contingency fee. The emphasis for this product is on actual recovery and puts the realisation rate at the centre of the offering. The insurance protects a minimum realisation rate, whilst the product overall is an enabler for the firm to access higher realisation potential than through the use other financing options or conditional fee arrangement.

We were flattered to have this product heralded as a “game-changer” for litigators by Herbert Smith Freehills following the initial launch.

Latest key updates:

Since the original launch there have been several key updates:

1. The volume of submissions for DBA cover has risen significantly and is accelerating in 2018.

2. Indemnity requests typically range from £300k- £3m, which broadly translates to commercial cases with fee budgets in the range of £600k-£6m, which highlights the diversity of potentially suitable cases.

3. The average time to secure formal offers of DBA insurance is 2.5 weeks from submission, vastly outperforming most litigation funders’ assessment processes and a reflection of the case quality.

4. Our very first DBA insured case successfully concluded at the end of last year.

5. Circa 40% of our DBA insurance applications have resulted from an early stage discussion between the fee-earner and one of our team at the point the firm was contemplating its retainer pitch to the client. In each case we helped the fee-earner model the numbers in preparation for their pitch to the client.

6. In addition to providing the insurance cover, we now have solutions to help firms get comfortable with the drafting of the DBA itself via specialist Counsel.

7. Following a high volume of requests we have been providing training seminars for litigators to explain the mechanics of DBA Insurance with case studies, as well as providing a wider market update on developments in the litigation finance market.

Let us help bring you up to speed

 

If you have a potential DBA case where you feel DBA insurance might be beneficial or you would simply like to learn more, please contact either: