No comments yet

Advantages And Disadvantages Of Damages Based Agreements

It is also recommended that counsel for the complainant carefully assess the pros and cons when considering a grant procedure. Ultimately, there may be less to be gained for lawyers if they negotiate a claim, even if damages are slightly increased due to the same costs, since costs are set on the basis of contingency fees. It is likely that defendants will make low Part 36 offers and invite legal proceedings to induce the plaintiff`s lawyers to settle it, rather than bearing the onerous costs of legal proceedings, which may outhold the costs that can be realized by a DBA. A CFA3 is an agreement by which the lawyer and the client agree to share the risk of the dispute by agreeing that some or all of the lawyer`s fees can only be paid if the claim (or defense) is “successful”. The definition of “success” is precisely defined by the CFA and is generally hungry for an agreed rate of damages to be paid by the losing party or the success of a particular problem in court. For defending parties, “success” is generally defined in such a way that the accused does not settle beyond a predetermined level or if his defence is successful at the main trial. Because of the difficulty of defining what “success” is, CFAs are most frequently used by parties or defendants with substantial counterclaim and, more rarely, concluded by defending parties who do not have a significant counterclaim. Where a client is entitled to costs from an opponent, he is not entitled to recover a fee directly on the basis of the DBA percentage, but he may be allowed to recover attorneys` fees on the basis of time and applicable hourly rates, plus all reasonable and proportionate disbursements and, where applicable, VAT. In any event, the receiving party may not bear costs in excess of those of the DBA. In return for their participation, third-party funders require the demanding party to enter into an agreement where the funder will receive a pre-agreed share of the “proceeds of the case”, usually in the order of 30-50% of the damage or, alternatively, a multiple of its cost, if it is greater than the pre-agreed share of the damage.

. . .

Comments are closed.