The Damage-Based Agreement Regulations 2010 come into force on 6 April 2010. They formalise the arrangements for lawyers entering into contingency fee arrangements with clients. All contingency fee arrangements signed on or after 6 April have to meet the following requirements:
- The fees are capped at 35% of the client’s compensation and include the VAT.
- The agreement must be in writing and specify the proceedings to which the agreement relates.
- The circumstances when the lawyer’s payments falls due must be identified; and
- The reason for fixing the agreed percentage must be identified.
Before the agreement is signed a client must be informed in writing about how and when they can request a cost review, the dispute resolution service that ACAS provide, whether an alternative way of funding the claim is available, including other insurances and pro bono representation and a reasonable estimate of the likely costs of the expenses that the client will be required to pay and when.
The client will not be able to terminate the agreement early if liability has been admitted, settlement has been agreed or it is less than 7 days before the start of the tribunal hearing. The lawyer will only be able to terminate the agreement early and charge if the client is behaving or has behaved unreasonably. If an agreement is terminated early, the lawyer can only charge the client a reasonable amount for the work done and costs incurred in the case up to that point. Barristers are not yet permitted to enter into contingency fee arrangements.