What Is Damages Based Agreements
September 4, 2023
Damages based agreements, commonly referred to as DBAs, have become increasingly popular in the legal industry in recent years. These agreements allow clients to pursue legal action without the need for significant upfront costs. But what exactly are DBAs, and why are they becoming so prevalent in legal practice?
A damages based agreement is a contractual agreement between a lawyer and a client that sets out the terms and conditions of the payment of legal fees. In a DBA, the client agrees to pay the lawyer a percentage of any damages awarded in their legal case. The lawyer is only entitled to receive payment if the case is successful.
DBAs were introduced in the UK in 2013 as an alternative to traditional fee arrangements, which often required clients to pay legal fees upfront regardless of the outcome of their case. This made it difficult for many people to access legal representation, particularly in cases where damages were uncertain or difficult to quantify.
DBAs allow clients to pursue legal action without the risk of significant upfront costs. This has increased access to justice for many people who might otherwise have been unable to pursue their legal rights.
However, DBAs are not without their risks. Because the lawyer is only paid if the case is successful, they may be less motivated to work on cases with a lower chance of success. This can create a situation where clients with weaker cases are unable to find representation.
Another potential risk of DBAs is that they may incentivize lawyers to pursue damages over other forms of relief. This could lead to situations where clients are encouraged to pursue compensation over other forms of justice, such as an apology or an injunction.
Despite these risks, DBAs are likely to continue in popularity in the legal industry. They offer a way for clients to pursue legal action without the need for significant upfront costs, and they allow for greater access to justice for many people. For lawyers, DBAs provide an alternative fee structure that can help them to attract new clients and provide more flexible payment options.