Litigation or resolving a dispute

As solicitors, we are often likened to our American counterparts, however shows like Ally McBeal and Boston Legal are the source of a number of misleading impressions. For example, I am not instructed on multi-million pound cases the night before trial, nor do I loudly object to my opponents’ questioning, and it is rare that I am carried out of the courtroom shoulder-high by my successful clients to the karaoke bar.  There is nothing wrong with this image – indeed it is the reason many of us legal folk went into the profession – but it is ultimately inaccurate.

One of the main differences between the two systems is that American juries decide on the amount of damages, and the lawyers take a cut.  In the UK, this has never been allowed, and the traditional view is that lawyers should not have a vested interest in the outcome.

On 1 April 2013 however, we took one step closer to bridging the gap when new legal rules came into force. These have allowed solicitors to offer clients a new way to fund their litigious pursuits by working for a percentage of the damages – these are known as Damages Based Agreement (DBAs).

DBAs allow solicitors to recover their fees based on the percentage of damages they recover for their client. So if you were claiming for an unpaid debt of £100,000, the solicitor could charge up to £50,000 if you were successful. However, if the other side was ordered to pay your reasonable legal costs (say £30,000), this would be deducted from the total amount you have to pay your solicitor.

So what are the benefits and drawbacks? For Claimants, it is not having to pay your legal fees unless you are successful and knowing that your solicitor has a shared interest in getting as much money as possible for you, but you are likely to lose a share of your damages. For Defendants, you may have to pay either what is assessed to be reasonable, or the percentage of the damages that the Claimant has to pay, whatever is the lower, but you may face higher value or riskier claim as solicitors try to get a larger chunk of damages.

So we have taken a step closer to the American model – see you all in the Karaoke bar after the trial!

If you are looking for advice on litigation or on resolving a dispute, please contact Rebecca Mabelle on 01752 292308 or email rmabelle@wolferstans.com.