Damages Based Agreements

Question 1

What is the key feature of a Damages-Based Agreement?
A. The solicitor is paid a share of the client’s damages only if the case succeeds
B. The solicitor charges a fixed hourly fee regardless of outcome
C. The solicitor’s fees are paid upfront by the client
D. The solicitor receives a success fee plus basic costs

Answer 1

A. The solicitor is paid a share of the client’s damages only if the case succeeds
Explanation: Under a DBA, no fees are payable unless the client wins or settles, and the fee is a percentage of the damages

Question 2

Which cap applies to DBAs in personal injury claims?
A. 50% of damages
B. No cap
C. 35% of damages
D. 25% of damages

Answer 2

D. 25% of damages
Explanation: The regulatory cap for personal injury DBAs is 25% of the damages awarded

Question 3

Which of these costs is NOT covered by a DBA?
A. The solicitor’s percentage fee
B. Expert witness fees
C. Opponent’s costs awarded against the client
D. The client’s disbursement costs

Answer 3

C. Opponent’s costs awarded against the client
Explanation: DBAs cover only the solicitor’s fee share; the client remains liable for disbursements and any costs order against them

Question 4

A client signs a DBA for a commercial dispute with a 40% cap. They recover £80,000. How much is the solicitor’s fee?
A. £32,000
B. £50,000
C. £20,000
D. £40,000

Answer 4

A. £32,000
Explanation: 40% of £80,000 is £32,000, which is within the 50% maximum for non-PI cases

Question 5

A DBA omits any mention of the percentage cap. This agreement is:
A. Enforceable if the client later confirms
B. Unenforceable due to lack of required disclosure
C. Valid as long as the client wins
D. Valid if the court approves retrospectively

Answer 5

B. Unenforceable due to lack of required disclosure
Explanation: Statutory rules require the cap and percentage to be set out in writing for enforceability

Question 6

On a failed DBA claim, the client must pay:
A. Nothing at all
B. Only their own disbursements
C. Basic fees at an hourly rate
D. Opponent’s costs

Answer 6

B. Only their own disbursements
Explanation: If the claim fails, the client owes disbursements (e.g. court fees), but no solicitor’s charges under the DBA

Question 7

In an employment tribunal DBA, what is the maximum percentage of damages the solicitor can take?
A. 25%
B. 35%
C. 50%
D. 100%

Answer 7

B. 35%
Explanation: Employment Tribunal DBAs are capped at 35% of damages under the DBA Regulations

Question 8

A DBA sets a percentage fee of 60% for a breach of contract claim without court approval. This is:
A. Valid, as non-PI cases have no cap
B. Valid if both parties agree
C. Invalid, as non-PI DBAs over 50% require court sanction
D. Valid, because the cap only applies to personal injury

Answer 8

C. Invalid, as non-PI DBAs over 50% require court sanction
Explanation: Non-PI DBAs may exceed 50% only if the court expressly approves the arrangement

Question 9

Which statement best describes the relationship between DBAs and recoverable costs?
A. The opposing party pays the DBA percentage
B. The client recovers the DBA fee from the opponent
C. The solicitor’s share comes out of the client’s damages, not from opponent’s costs
D. The DBA fee replaces the client’s entitlement to recover any costs

Answer 9

D. The DBA fee replaces the client’s entitlement to recover any costs
Explanation: Under a DBA, while basic costs remain recoverable from the opponent, the solicitor’s percentage fee is borne by the client, reducing net damages