Damages-Based Agreements (DBAs)

How Do DBAs Work?

Direct Answer: A Damages Based Agreement (DBA) is a no win no fee arrangement where the solicitor's fee is calculated as a percentage of the damages recovered. Caps apply: 25% for personal injury, 35% for employment tribunal cases, and 50% for all other commercial cases (inclusive of VAT and counsel fees).

Under a DBA, the solicitor agrees to act for the client on the basis that their fee will be a percentage of the damages recovered. If the case is unsuccessful, the client pays nothing. Unlike a CFA, the solicitor does not charge base costs separately — their entire fee is the agreed percentage of the recovery.

The DBA must be in writing and must comply with the Damages-Based Agreements Regulations 2013. The agreement must specify the claim or proceedings to which it relates, the circumstances in which the payment becomes due, the amount or method of calculation of the payment, and the reasons for setting the amount at the specified level.

Fee Caps

All percentages are inclusive of counsel's fees but exclusive of VAT. For personal injury, the cap applies only to general damages (pain, suffering, and loss of amenity) and past losses — it explicitly excludes damages for future care and loss.

DBAs vs CFAs

The fundamental difference is how the solicitor's fee is calculated. Under a CFA, the solicitor charges base costs (the normal fee for work done) plus a success fee uplift. The opponent typically pays the base costs, and the success fee comes from the claimant's damages.

Under a DBA, the solicitor takes a single percentage of the damages. There are no separate base costs or success fees. If the DBA payment exceeds what the solicitor would recover in inter partes costs, the solicitor keeps the DBA percentage. If the recoverable costs exceed the DBA payment, the solicitor can only claim the DBA percentage — they cannot "top up" from inter partes costs.

Why DBAs Remain Rare

Despite being available since April 2013, DBAs have been described as "dead on arrival" by many practitioners. The reasons include:

• Regulatory uncertainty: The DBA Regulations 2013 have been widely criticised as poorly drafted, creating uncertainty about compliance
• No hybrid model: Unlike many jurisdictions, hybrid DBAs (combining a reduced hourly rate with a percentage of damages) are prohibited under current regulations
• Indemnity principle: Concerns about how the indemnity principle interacts with the DBA payment cap
• Enforcement risk: A non-compliant DBA is entirely void — the solicitor cannot recover any fees at all, even on a quantum meruit basis
• CFA familiarity: Solicitors are more comfortable with CFAs, which have been established since 1995

The Civil Justice Council published a report in 2015 recommending significant reforms to make DBAs more workable, including permitting hybrid DBAs. The Ministry of Justice has indicated support for reform, but legislation has not yet been introduced.