For many employees, the prospect of bringing a claim against their employer can be daunting, particularly when concerns about legal costs are involved. A damages based agreement (DBA) is one funding option that can help individuals pursue a claim without paying any legal fees upfront.
What is a damages based agreement?
A damages based agreement (DBA) is a type of "no win, no fee" arrangement between a client and their solicitor. Under a DBA, the solicitor's fee is dependent on the compensation recovered in a successful claim. If the claim is unsuccessful, the client will generally not have to pay the solicitor's fees, although they may still be liable for certain disbursements, which commonly include a barrister’s costs to represent you at a tribunal hearing.
A damages based agreement enables an employee to pursue a claim without paying legal fees as the case progresses. Instead, the solicitor receives an agreed percentage of any compensation awarded or settlement reached at the end of the proceedings.
How does a DBA work in employment claims?
Typically, under a damages based agreement, a solicitor and client agree at the outset that legal fees will only be payable if the claim succeeds.
For example, if an employee brings a claim for unfair dismissal, discrimination, whistleblowing detriment, or unpaid wages and receives compensation, the solicitor will be entitled to a pre-agreed percentage of that award. If no compensation is awarded the solicitor will generally not receive their fee.
The agreement must be set out in writing and clearly explain how any payment will be calculated.
Is there a limit to how much the solicitor can be paid in a damages based agreement?
In employment law matters, the solicitor's payment under a DBA is capped at 35% of the compensation recovered, including VAT. This limit is set by the Damages Based Agreements Regulations 2013 and is designed to ensure that claimants retain the majority of their compensation.
The percentage charged may differ on a case-by-case basis and will depend on the agreement reached between the solicitor and client at the start of the case.
What types of employment claims can be funded by a DBA?
A damages-based agreement may be suitable for a range of employment disputes, including:
- Unfair dismissal claims
- Constructive dismissal claims
- Workplace discrimination claims
- Harassment and victimisation claims
- Whistleblowing claims
- Unlawful deduction from wages claims
- Breach of contract disputes
Whether a DBA is available will depend on the strength of the claim and the circumstances of the case. The merits of a claim will be assessed by your solicitor before deciding whether a DBA is appropriate.
What is the difference between a DBA and a conditional fee agreement?
Damages based agreements are often confused with conditional fee agreements (CFAs), which are another form of "no win, no fee" funding.
The key difference is that a DBA calculates the solicitor's fee as a percentage of the compensation recovered, whereas a CFA generally involves paying legal fees as well as a success fee (calculated as a percentage of the compensation), if the case is won.
The most suitable option will depend on the individual circumstances of the case.
If you are considering bringing a claim against your employer, seeking early legal advice can help you understand the strength of your case, the likely costs involved, and whether a damages based agreement or another funding option may be appropriate.
At Stephensons, our experienced employment law solicitors can advise employees on a wide range of workplace disputes and will discuss the funding options that may be available to help you pursue your claim. Contact our employment law team today by completing our enquiry form.
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