The Damages-Based Agreements Regulations 2013 (SI 2013 No. 609) are a set of regulations that govern the use of damages-based agreements (DBAs) in the United Kingdom. These agreements are also known as contingency fee agreements and allow lawyers to take a percentage of any damages awarded to their clients in a case. DBAs are becoming more common in the UK, but it is important for both lawyers and clients to understand the regulations surrounding them.
One of the key provisions of the regulations is that lawyers must provide their clients with a written agreement that outlines the percentage of damages that will be charged if the case is successful. This agreement must also include a description of the work that will be done by the lawyer and an estimate of the costs that will be incurred. The client must sign this agreement before any work is done by the lawyer.
There are also limits on the percentage of damages that lawyers can charge under a DBA. In most cases, the maximum percentage is 50% of the damages awarded. However, in personal injury cases, the maximum percentage is 25%. The regulations also specify that lawyers cannot charge a percentage of damages awarded for punitive or exemplary damages.
One potential issue with DBAs is that they may encourage lawyers to only take on cases that have a high likelihood of success. This could mean that some clients with weaker cases may struggle to find representation. To address this, the regulations require lawyers to provide an assessment of the case`s prospects of success before entering into a DBA. If the prospects are deemed to be poor, the lawyer must advise the client against pursuing the case under a DBA.
The regulations also provide some protection for clients in the event that they terminate a DBA before the case is concluded. If a client terminates the agreement, the lawyer can only charge for the work that has been done up to that point. This prevents lawyers from charging clients for work that was not completed or for costs that were not necessary.
In summary, the Damages-Based Agreements Regulations 2013 provide a framework for the use of DBAs in the UK. These agreements can be beneficial for clients who may not have the resources to pay legal fees upfront. However, it is important for clients to understand the terms of any DBA and to ensure that they are entering into an agreement that is fair and reasonable. By following the regulations, lawyers can provide a valuable service to their clients while maintaining ethical and professional standards.