Last week, the Ministry of Justice released the final draft regulations on Damages-Based Agreements (DBA’s).
The regulations state that, for all cases (other than personal injury and employment disputes), the allowable contingency fee will be capped at 50% of damages, inclusive of VAT. The regulations state that recoverable base fees and counsel’s base fees must be deducted from the contingency fee. This confirms speculation that the ‘Ontario model’ of contingency fees is to be implemented in England and Wales.
Interestingly, where Counsel is also willing to act under a DBA, the contingency fee payable to the solicitor and Counsel must not together exceed the 50% cap. For example, if a solicitor charges a contingency fee of 30% of damages, the maximum fee Counsel could charge would be 20% of damages as the two fees aggregate to the maximum cap of 50% allowable.
For personal injury cases, there is a 25% cap inclusive of VAT. This will apply to general damages and damages for pecuniary loss although it will exclude “future pecuniary loss”.
DBAs for employment cases are included within these regulations however they are dealt with separately to all other cases (namely in paragraphs 5, 6, 7 and 8 of the Draft Statutory Instrument).
The capping for DBAs for non-employment cases only apply at first instance, with no mention in the guidelines of what may be acceptable in the Court of Appeal or the Supreme Court.