Damages Based Agreement

Can’t afford to pay for a solicitor?! There is light at the end of the tunnel with Inspired. Inspired now offer Damages Based Agreement to help you fund your employment law claim.

What is a damages based agreement (DBA)?

A DBA is an agreement between your solicitor (Inspired Legal Services Ltd) and you, whereby we agree to share the costs risk of litigation.   It’s a type of ‘no win no fee’ agreement.

Under a DBA with Inspired, you only pay expenses such as expert fees and Barrister’s fees (if and when they become due), but you do not pay our legal costs (fees) unless you win compensation (or monies worth) from your opponent. 

Expenses will not always become due, especially if the case settles early. 

To compensate Inspired for the risk of not being paid fees in the event of your case losing, the DBA fee payable for our fees and VAT will equate to a sum of no more than 35% of the gross amount recovered from your opponent.  Any and all expenses, payable by you as the claim proceeds, are in addition to the DBA percentage fee.

 

Damages Based Agreement

DBAs are a relatively new funding option in Employment Tribunal Cases. Put simply, we will agree with you a particular percentage share of any damages that we will receive on successful conclusion of your case rather than charge you an hourly rate as we go along. For example if your claim is estimated to be worth £50,000.00 and we agree to accept 35% of your damages, then you will pay us nothing if you lose.  If you win then we will be owed 35% of any damages you recover.  If you recover the whole £50,000.00 then you will pay us £17,500 in addition to any expenses you have already paid.  If you partially win your case and you are awarded £20,000.00 then you will pay us £7,000.00.  Ultimately, if you don’t get paid we don’t get paid.

Can you protect against the potential costs payable to an opponent?

In Employment cases, it is unusual for a party to be ordered to pay the other side’s costs. Each side will pay their own legal costs in almost every case. The Tribunal may order one party to pay the other sides costs if they have been abusive, disruptive or have otherwise acted unreasonably during the case. A Tribunal may also order a party to pay costs if their claim had no reasonable chance of success, or they defended a claim where there was clearly no defence. 

Such awards are very rare and therefore the risk of it happening to you are very small.  However, the risk does still exist.  If you would rather not take the risk then it may be possible to purchase ‘after the event’ legal expenses insurance (ATE). For more on this please see our Factsheet on ATE Insurance. 

Should you tell your opponent about your DBA agreement?

There is no need to inform your opponent of any DBA Agreement with us, save possibly at the time of any recovery of costs from the opponent, but such cases are exceptionally rare in the Employment Tribunal.

What are the advantages of you entering a DBA?

  • Entering into a DBA with Inspired will enable you to share the risk and costs of litigation
  • If you lose you have no liability to pay our fees, but you will have to pay disbursements and expenses
  • If you win, but the recovery from the losing party is relatively low, the fees you pay us (the DBA percentage fee from recovered monies) may be significantly less than your fees would have been if you were paying our hourly rate throughout. 
  • If you settle early, you may not have to pay any expenses as your case may not have reached the point of needing an expert or Barrister.

What are the disadvantages of you entering a DBA?

  • If you win your case, depending upon the sum recovered from the losing party, the fees you pay us (DBA percentage fee from recovered monies) may be far higher than your fees would have been if you were paying our hourly rate throughout.

Benefits of funding arrangements

  • DBAs potentially enable a client to pursue good claims and facilitate access to justice when they otherwise could not have afforded it
  • Before entering into a DBA, or any funding arrangement it is necessary for a client to consider the financial implications of “sharing the risk”, and as to the potential net proceeds from the litigation.

*’No win no fee’ does not mean ‘no win, no cost’. Disbursements (expenses) are payable regardless of outcome and Fees may be payable if a case is not pursued at client’s request or agreement is otherwise terminated. Assessment fee applies.’