What are Damages Based Agreements?

Damages Based Agreements (DBA), also referred to as contingency fee agreements, can be an appropriate alternative to Conditional Fee Agreements (CFA) and are used as a form of contract between a solicitor and their client to cover the legal costs for a running case. Mainly used in Civil Litigation matters such as personal injury, Damages Based Agreements can prove useful for a vast range of legal matters, with the exception of criminal cases and family law cases.

The main principles of a damages-based agreement include the basis that the representatives fee, such as a solicitor’s fee, will be decided based on the success of the case and will be a percentage of the damages recovered by the client.

Should the case be lost, the legal representative will not recover the necessary costs to incur the representative’s fee from the client. Therefore is protected from paying costs which do not directly relate to the sum recovered by the representative with the exception of any opponent’s legal costs.

Damages Based Agreements can guarantee that in straightforward circumstances, the costs which clients incur will be set and proportionate to the financial outcome of the case. This can prevent costs that are to be assessed on the hourly rate, in line with indemnity principles, from amounting to an unrealistic and stressful sum.

Furthermore, any additional fees sustained by the legal representatives for time spent on additional legal services, such as Counsel’s fees or ATE insurance, can be included in the percentage deduction, dependent upon the type of case and applicable cap, which also remains recoverable from the paying party.

The legal definition of a Damages Based Agreements (DBAs) is:

“(a) A damages-based agreement is an agreement between a person providing advocacy services, litigation services or claims management services and the recipient of those services which provides that—

(i) The recipient is to make a payment to the person providing the services if the recipient obtains a specified financial benefit in connection with the matter in relation to which the services are provided, and

(ii) The amount of that payment is to be determined by reference to the amount of the financial benefit obtained.”

What is the difference between a CFA and DBA?

Damages Based Agreements and Conditional Fee Agreements are types of funding arrangements which allow clients to pursue legal cases on a “no win, no fee” basis, furthermore, allowing clients and legal representatives to share the risk of financial obligations should the case be successful or not.

Should a client win a case under a Conditional Fee Agreement, they are required to pay a fee based on costs incurred by the solicitor. A success fee will be disclosed with no reference to the total amount recovered. A Damages Based Agreement determines the fee amount based on the amount of damages recovered, meaning the more the solicitor secures for the client, the higher the fee charged.

It is important to note that a DBA does not increase the liability of the paying party for costs; when cost assessment begins between parties, costs are still evaluated based on standard hourly rates in line with the indemnity principle. However, recovery charges are capped in line with the DBA percentage fee.

DBAs tend to be simpler than CFAs, primarily because terminating a CFA can lead to various consequences, particularly concerning costs. When DBAs were first introduced in 2013, there was some uncertainty about the implications of terminating them before a successful outcome was reached. There was widespread confusion in the legal world about whether the solicitor would be entitled to payment if the agreement was cancelled prematurely. However, recent common law decisions have clarified this issue.

Ruling of an Unenforceable DBA: Reeves v Frain and McKinnon

In the case of Reeves v Frain and McKinnon [2025] EWHC 185 (SCCO), the High Court ruled that the damages base agreements used in the probate dispute over the multimillion-pound estate were unenforceable and did not comply with the necessary DBA regulations. Costs Judge Brown concluded that the DBAs failed to meet the specific requirements set out in the Damages Based Agreements Regulations 2013.

In regard to the estimated £100m estate, the claimant sought validation of a 2014 will made by her late father and so chose to bring the matter to court. The second and fourth defendants, the son and grandson of the deceased, were represented by The London Litigation Partnership (trading as LLP solicitors) and were set to receive 70% of their legal fees from the claimant after the will was ruled invalid by a judge in 2014.

The defendants, represented by LLP solicitors, had funded their case partially through DBAs, with their legal fees divided into three parts; an initial private retainer, the costs incurred under the DBA, and a subsequent additional private retainer which had been agreed upon after the case was successful. Following a new hearing in 2024, Costs Judge Brown raised concerns about the enforceability of these costs. Doing so prompted LLP solicitors to disclose the DBAs and retainer documents, which in return were challenged by the claimant on several grounds.

Costs Judge Brown sided with the claimant in her argument that, unlike in the matter of employment cases, DBAs in civil litigation must include payment for counsel’s fees. In this case, the DBA listed these fees as chargeable expenses which violated the DBA rules and regulations. The claimant’s costs counsel, Robert Marven, stated that the law firm had ‘improperly’ applied an employment-style DBA to the litigation case, suggesting this had occurred by accident.

Once the probate dispute had been resolved, LLP solicitors informed the defendants in writing that their work relating to the DBA was complete, meaning any additional work they would undertake would be charged at a rate of £500 per hour. The firm stated that this created “fresh retainers,” a statement that the claimant discredited by arguing that the DBA had been wrongfully dismissed.

Despite the invalid DBA ruling, which had been passed down previously by Costs Judge Brown, he acknowledged that a “win” in the case had been achieved on February 16, 2022. Although he did make it clear that in many situations, winning the case does not automatically deem all obligations listed under the retainer are complete and that in general, “a conditional fee agreement does not end immediately upon a “win”; otherwise there would always need to be a post-judgment conventional retainer after a conditional fee agreement or damages-based agreement.”

Costs Judge Brown went on to say that although he “did not agree” with the manner in which LLP told the defendants that work under the DBA was complete, there was no indication that had the work not been complete, LLP would not have seen to it that work required was dealt with and the DBA obligations were finalised.

The judge concluded that while the law firm’s claim for costs based on a private retainer for work already covered by the DBA was invalid, there was no issue with assuming a private retainer for work not included in the DBA. Ben Chowdhury, managing associate at Kain Knight, the costs law firm representing the claimant, emphasised that the ruling highlighted the importance of ensuring that DBAs are carefully drafted and fully comply with the relevant regulations.

The full case judgment can be found here.

How can Greener Costs assist?

Our team of expert Costs Draftsmen and Costs Lawyers can be relied upon to expertly defend and challenge Damage Based Agreements that have been questioned in court.

With twenty years of experience in the costs law industry, our team have the knowledge and expertise to prepare Damages Based Agreements and ensure that the terms and conditions laid out within a DBA are compliant with the Damage Based Agreement regulations.

As a digital legal costs service, we can ensure swift results and fast communications. Our management team consistently track the progress of our cases and can promise regular and informative updates at a client’s request.

To find out more and to receive advice on Damage Based Assessments or from our experts, please contact us on 01204 263047 or email us at info@greenercosts.co.uk.