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At a recent seminar hosted by Kain Knight, Andrew Post QC of Hailsham Chambers drew an interesting comparison between the post-Jackson litigation costs regime and the poem ‘Waste Land’ by TS Eliot:

‘Waste Land’ begins with the line “April is the cruellest month…” and is notoriuosly one of the most opaque pieces of literature…

His presentation on the post-LASPO costs regime focused on the removal of Conditional Fee Agreement (‘CFA’) success fee recoverability and the introduction of Damages Based Agreements (‘DBAs’). Several notable questions were posed, to which there are currently no concrete answers; a symptom of the opaqueness of the reforms perhaps.

RECOVERABLE CFA SUCCESS FEES

CFA success fees will remain recoverable from the losing party, for individual CFAs entered into prior to 1st April 2013, when implementation of the LASPO Act is expected. For collective CFAs entered into prior to this date, the success fee will remain recoverable providing that “work has been done”. But what will constitute “work done”?

IRRECOVERABLE CFA SUCCESS FEES

Post implementation of LASPO, law firms may seek to win business by offering lower success fees than competitors. However, will firms realistically be able to stomach a lower success fee in return for risking potentially years’ worth of WIP? Or will they just offer DBAs instead, particularly given the apparent concern relating to how CFAs would work, having regard to Regulation 4 of the DBA Regulations which some argue conflicts with the definition of Damages Based Agreements, as Andrew Post QC commented on, albeit the DBA Regulations may change following the debate in the House of Lords this afternoon.

INCENTIVE TO CHALLENGE DBA ENFORCEMENT?

In a DBA structure, some argued that clients will inevitably challenge the contingency fee payable to their lawyer, particularly as the current Regulations are relatively silent as to termination. Many believe that DBAs stand to be highly profitable to law firms if they spot early settlement potential; will solicitors therefore cherry pick their DBA cases with this in mind? Will we see a future of actions between clients and their lawyers surrounding the DBA?

TheJudge is the leading broker of litigation funding and insurance. If you would like to discuss what options are available to work alongside CFAs or DBAs, or even where the client is instructing the firm on a private fee paying basis, contact us for more information.