Recent years have seen the question of legal funding very much under consideration, and under public and government consideration.
2013 saw the Jackson Reforms. Under Lord Jackson’s changes, in many areas of law, legal aid all but disappeared. Many in the legal sector were concerned regarding the cut in funding, as that limited access to justice to those that could afford it. Further, many lawyers and firms working in areas of law that relied upon legal aid funding suddenly found themselves struggling as a business, with fewer clients and less government funding.
Aside from that, 2013 also saw a change to another aspect of funding- the humble Conditional Fee Arrangement (CFA). In existence since 1998, more colloquially referred to as the ‘no win, no fee’ avenue of legal funding, the CFA all but disappeared in 2013.
Since the beginning, a CFA has been a particular favourite way of funding personal injury claims, and accident claims, be they at home, out and about, or in the workplace. Despite increasing efforts and care taken regarding health and safety in the workplace, and stringent health and safety requirements and obligations imposed upon employers, accidents at work still happen on a regular basis. According to HSE figures, 2014 saw an estimated 629 000 in the UK workplace suffering from a workplace accident of whatever nature. Of that, 203,000 injured employees needed over three days of work to recover, with an additional 138,000 requiring more than seven days off work.
According to UK law, those that have a workplace accident, and suffer a personal injury from that, are entitled to make a claim against their employer for the negligence or breach of health and safety that caused the accident to happen. However going to court is often expensive; that is where the CFA funding structure came into its own.
Under a CFA, litigants did not pay their lawyers for their representation, or the work done on their case. Instead, the lawyers will only be paid by the litigant if their case is successful. If unsuccessful, the litigant will not pay the lawyer’s fees. If successful, then the lawyers will also get a ‘success fee’ from any compensation awarded. As such, lawyers undertaking personal injury cases (such as accidents at work) have to ensure that the case will be successful if brought to court.
With that funding structure, many thousands of litigants have been able to seek justice following an event that resulted in a personal injury, be it at work or elsewhere. However, to bring such funding arrangements in line with modern law, the CFA was altered in 2013.
In its place a practically identical method of funding personal injury cases was established- the Damages Based Agreement (DBA). DBA’s have been in existence for a long time, and in 2013 they were allowed to be used to fund personal injury cases. Under a DBA, the rules are more complex, and different. Putting the terms of a DBA in very simplistic terms, lawyer and client agree prior to any work being done that a pre-arranged percentage of any compensation awarded will be paid to the lawyers. This will cover the lawyer’s fees, costs, and ‘success fee.’ This is a fixed, pre-arranged percentage, payable from any compensation awarded, and is capped at 25% of the total awarded to the client.
The structure of the CFA was altered slightly along with the introduction of DBA’s for personal injury cases. However, from the litigant’s perspective, the CFA remains virtually the same. Amongst the subtle changes, many personal injury firms will require the litigants to pay a pre agreed sum to their lawyers at successful resolution of the case, taking into consideration the work and billable hours put in by the lawyers. Such a payment would come out of any compensation awarded, and is again capped at 25% of any financial award made. Further, compensation payments were increased by 10% to reflect this extra payment. As such, the CFA remains virtually the same.
Many personal injury lawyers are unsure regarding DBA’s. Although the DBA is ‘safer’ financially for the lawyer and more guaranteed than a CFA, many feel that it is slightly more complex for the client, and slightly unfair to them. As such, many persona injury firms, taking on an accident at work claim or similar, prefer to use a CFA- but also offer and explain the terms of a DBA additionally.
Amidst the Jackson reforms making getting access to justice harder and more costly, the introduction of DBA’s to personal injury cases was welcomed. Along with the restructuring of CFA’s, personal injury litigants suffering from the effects of accidents in the workplace or elsewhere can still get access to justice, at little or no financial risk to themselves, and with more methods of paying their lawyers now available to them.