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Legal Aid, Sentencing and Punishment of Offenders Act 2012

Section 45: Damages-based agreements

288.Damages-based agreements (“DBAs”) are another type of ‘no win, no fee’ agreement under which a lawyer can recover a percentage of the client’s damages if the case is won, but will receive nothing if the case is lost. Currently, solicitors and barristers are not permitted to act under DBAs in civil litigation, but solicitors are permitted to act under DBAs in non-contentious business, including cases before employment tribunals.

289.Section 45 amends section 58AA of the Courts and Legal Services Act 1990 (inserted by section 154 of the Coroners and Justice Act 2009), which currently provides that DBAs are enforceable only when they relate to employment matters. The effect of the amendments is to enable the use of DBAs in most civil litigation by persons providing advocacy services, litigation services or claims management services.

290.Subsections (2) and (3) omit references to employment matters, the effect of which is that a DBA need not relate to an employment matter in order to be enforceable.

291.Subsection (5) inserts new paragraph (aa) into subsection (4) of section 58AA, to provide that a DBA may not relate to proceedings which may not be the subject of an enforceable CFA under section 58A of the Courts and Legal Services Act 1990 (essentially criminal and family proceedings) or to proceedings of a description prescribed by the Lord Chancellor.

292.Section 58AA(4) also sets out other conditions that must be met for a DBA to be enforceable. The amendments made by subsections (6) and (7) of this section make clear that the Lord Chancellor may, but need not, prescribe the information which a legal representative must provide to a claimant prior to entering a DBA and the maximum amount which may be paid under the DBA from the claimant’s damages. Any regulations made under section 58AA(4) are subject to the affirmative resolution procedure (see subsection (12)).

293.Subsection (8) amends section 58AA to provide that rules of court may be made in respect of the assessment of costs in proceedings funded under DBAs. For the avoidance of doubt, subsection (9) inserts a definition of “proceedings” into section 58AA, which includes any sort of proceedings for resolving disputes (and not just proceedings in a court), whether commenced or contemplated.

294.Subsection (10) further amends section 58AA to provide that, except where they relate to employment matters, non-contentious business agreements between solicitors and clients to which section 57 of the Solicitors Act 1974 applies will not be unenforceable by reason of the provisions of section 58AA.

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