WHEN IS A DAMAGES BASED AGREEMENT AVAILABLE?

Typically a Damages Based Agreement (DBA) is a type of alternative funding to pay for solicitors to act for you in relation to your dispute. There can be different types of agreement and so care should be taken to review the precise version you are considering, or have been offered. You should obtain legal advice to ensure you are clear on meaning as these are legally binding types of contract.

Traditionally solicitors have charged on an hourly rate basis. You pay whether you win or lose. A DBA is a type of litigation funding that might be used to pay a solicitor for their time and work on your behalf.  

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The solicitor will assess your case to see whether your prospects of success are sufficiently high to offer this form of funding. Under a DBA the solicitor will be paid as a percentage of the damages. If there is no recovery, there is no fee. That can be incredibly attractive for businesses and investors with significant claims, because it avoids the cashflow impact of having to fund legal costs. As a worked example if your claim is for damages of £100,000 and you enter into a Damages Based Agreement for 40%, the solicitor will be entitled to charge 40% (+VAT) of the damages recovered. Costs can still be recovered from the opponent with claims worth over £10,000 in addition to lessen the overall commercial cost.

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Solicitors aren't obliged to offer DBA's in commercial and property litigation. Although there are no hard and fast rules on when DBA's might be offered, typically this type of funding will only be offered where the amount in dispute is in excess of £50,000, where the opponent has clearly available assets and where your prospects of success are high. DBA's can be entered into for millions of pounds and at that level the percentage might be lower than in lower value disputes where the percentage may be higher.