Tag Archives: Litigation funding

Hybrid DBAs – what are the options?

Litigation fundingTraditionally designed to finance the claimant, third party funding for commercial litigation has evolved and a number of new funding products aimed at law firms themselves are entering the litigation funding market.

These new products have been created specifically to finance the law firms directly to allow them to offer Damages Based Agreements (DBAs). These new funding products have attracted a lot of attention in industry press. Many view them as response to the frustrations law firms have experienced with the uncertainty surrounding DBA regulations.

Two main options exist when it comes to DBAs for law firms. Option 1: the litigation funder agrees to finance a percentage of the risk, meaning that the firm would enter into a full DBA with the claimant and receive a proportion of their WIP through a separate agreement with the funder.

Option 2: similar to a partial DBA from the law firm’s perspective, it involves the claimant entering into a standard third party funding arrangement with the funder directly. The funder then enters into an additional and separate agreement with the law firm.

Director at the largest litigation funding broker in the UK, TheJudge, Matthew Amey, explains that “this would give the firm the ability to act on a partial contingency fee basis.”

In the article “Hyrbrid DBAs are the talk of the town – what’s the true picture?” published on TheJudge company website, Amey continues to say that “using this model, the firm’s retainer is a standard fee paying one – not a DBA. Crucially all parties agree that the law firm can be paid a share of the funder’s uplift if the case is successful.”

We will wait to see whether either of these two hybrid DBA arrangement options will become mainstream and what new options may emerge as rules on DBAs become clearer. Damages Based Agreements continue to be a topic of great interest in the litigation funding market and hold a special interest for law firms in particular. More information and regular updates about DBAs and other litigation funding and ATE insurance subjects can be found in the news area of TheJudge website: http://www.thejudge.co.uk/news