This year has provided clarification of the damages-based agreements (DBA) regime in England and Wales. This is a relief for claimant lawyers and litigation funders, many of whom have avoided DBAs due to concerns about (1) the interpretation of the 2013 DBA Regulations (the regulations), and (2) enforceability of DBA terms which seek to mitigate financial exposure. Efforts have been made to clarify the DBA regime, but the timeline for new or amended regulations is uncertain. 

Three recent cases outline the court’s interpretation of the regime, including: (1) Tonstate, (2) UK Trucks, and (3) Lexlaw. The judgments confirm:

1. DBAs are not available to defendants without prospect of recovering sums from opponents;

2. litigation funding agreements do not constitute DBAs; and

3. representatives are permitted to charge time costs upon early termination of DBAs.

Although these decisions provide reassurance, uncertainty regarding the interpretation of the regulations remains.

This article was first published in The Law Society Gazette, on 14 June 2021. Please click here to read the full article.


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