If you believe you have a strong legal claim but worry about how to pay a solicitor, you are not alone. Legal costs in the UK can be high, and for many people and businesses, paying hourly fees upfront is simply not realistic. This is where a Damages Based Agreement (DBA) can make a real difference.
A DBA is designed to improve access to justice. It allows you to pursue a claim without paying your solicitor’s fees upfront, and instead links their payment to the success of your case. This article explains DBAs in clear, simple terms so you can decide whether this type of agreement may be right for you.
What Is A Damages Based Agreement?
A Damages Based Agreement is a funding arrangement between you and your solicitor where legal fees are only paid if your case is successful.
Instead of charging you by the hour, your solicitor agrees to take a percentage of the damages or financial benefit you recover at the end of the case. If you recover nothing, you do not pay your solicitor’s fees.
This is why DBAs are often described as a form of “no win, no fee” agreement.
How Does A Damages Based Agreement Work?
Under a DBA:
- You and your solicitor agree in advance on a percentage of the damages
- This percentage becomes the solicitor’s fee if you win or settle your case
- If you lose and recover nothing, the solicitor does not get paid
The key point is that the solicitor’s fee is dependent on success. Their interests are closely aligned with yours because they only get paid if you do.
How Is A DBA Different From Traditional Legal Fees?
Most solicitors in the UK charge based on:
- An hourly rate
- The amount of time spent on your case
- Upfront payments into a client account
This can be difficult if you do not have available funds, even if your case is strong.
With a DBA:
- You do not usually pay legal fees upfront
- Costs are taken from the damages recovered
- The financial risk is shared between you and your solicitor
For many claimants, this removes the main barrier to bringing a legal claim.
Is There A Limit On How Much A Solicitor Can Take?
Yes, in certain situations.
DBAs In Court Proceedings
If your case goes through the courts, the solicitor’s fee under a DBA is capped at:
50% of the damages recovered (including VAT)
This cap exists to protect you and ensure you keep a fair share of your compensation.
DBAs Outside Court Proceedings
If your matter is resolved outside formal court proceedings, the 50% cap does not apply. The percentage is agreed between you and your solicitor, and can be any figure, provided it is fair and transparent.
What Types Of Cases Use Damages Based Agreements?
DBAs are mainly used in civil claims where money or a financial benefit is being recovered. Common examples include:
- Commercial disputes
- Shareholder and company disputes
- Asset recovery cases
- Contract disputes
- Professional negligence claims
They can also be used in some cases involving non-monetary relief, but this is less common.
Are DBAs Suitable For Defendants?
In most cases, no.
A DBA relies on recovering damages or a financial benefit. Defendants are usually defending a claim rather than seeking to recover money, so there is nothing from which the solicitor’s fee can be paid.
For this reason, DBAs are mainly suitable for claimants, not defendants.
Why Would A Solicitor Agree To A DBA?
From a solicitor’s perspective, a DBA is a calculated risk.
They will usually only offer a DBA if:
- Your claim has strong legal merit
- There is a realistic chance of recovery
- The potential value of the claim justifies the risk
Before agreeing to a DBA, solicitors will carefully assess your case. If the claim is weak, low value, or very risky, they are unlikely to offer this type of agreement.
Why Might A DBA Be Right For You?
A DBA may be suitable if:
- You have a strong claim but limited funds
- You want to avoid paying legal fees upfront
- You are comfortable sharing a percentage of your damages
- You want your solicitor fully invested in the success of your case
For many individuals and businesses, a DBA makes the difference between being able to pursue justice or having to walk away.
DBAs And Minority Shareholders
DBAs are particularly useful for minority shareholders.
If you are a minority shareholder, you may:
- Feel trapped in a company
- Lack funds to negotiate an exit
- Need legal support to protect your interests
Under a DBA, you may agree to give up a portion of the value of your shareholding in exchange for your solicitor’s help. This allows your solicitor to:
- Advise you properly
- Conduct negotiations
- Draft shareholder agreements
- Prepare exit arrangements
Without a DBA, many minority shareholders would not be able to afford this level of legal support.
What Happens If Your Case Is Unsuccessful?
If you recover nothing, then:
- You do not pay your solicitor’s fees
- The DBA protects you from legal fee liability to your own solicitor
This makes DBAs relatively low risk for claimants, especially outside court proceedings.
However, there is an important distinction to understand.
Do DBAs Cover Legal Expenses And Disbursements?
Usually, no.
A DBA generally covers the solicitor’s professional fees only. Other costs, known as disbursements, may still be payable by you. These can include:
- Court fees
- Expert reports
- Barristers’ fees
- Administrative costs
That said, if your case is not in litigation, these expenses are often limited.
Always make sure you understand exactly what is and is not included before signing a DBA.
What About The Risk Of Paying The Other Side’s Costs?
This is a crucial point.
If your case goes to court and you lose, you may still be liable to pay your opponent’s legal costs, even if you have a DBA.
A DBA does not protect you from this risk.
How Can You Manage This Risk?
Many claimants choose to take out After The Event (ATE) insurance.
ATE insurance is designed to cover:
- The other side’s legal costs if you lose
- Sometimes your own disbursements
This type of insurance can significantly reduce your financial risk and is commonly used alongside DBAs in litigation cases.
Is A DBA Completely Risk-Free?
Outside litigation, a DBA is often close to risk-free because:
- There is no court
- There is no adverse costs risk
- If there is no recovery, you pay nothing
In litigation, however, the risk of adverse costs means you should always seek clear advice before proceeding.
What Must A DBA Include?
A valid DBA must:
- Be in writing
- Clearly state the percentage payable to the solicitor
- Explain how the fee will be calculated
- Set out what happens if the case succeeds or fails
Transparency is essential. You should fully understand the agreement before signing it.
Can A DBA Be Combined With Other Funding Options?
Yes.
DBAs are often used alongside:
- Fixed-fee initial advice
- Conditional Fee Agreements (CFAs)
- ATE insurance
- Third-party litigation funding
Your solicitor should explain all available funding options so you can choose the one that best suits your circumstances.
When Should You Consider A DBA?
You should consider a DBA if:
- You are confident in the strength of your claim
- You want to reduce upfront legal costs
- You understand and accept the percentage-based fee
- You want a solicitor who shares your financial risk
A DBA is not right for every case, but in the right situation, it can be extremely effective.
Final Thoughts
A Damages Based Agreement can be a powerful way for you to pursue a legal claim when traditional legal fees are out of reach. By linking your solicitor’s payment to success, a DBA aligns your interests and removes much of the financial pressure at the outset.
However, DBAs are not suitable for every situation. You must understand the risks, particularly in litigation, and consider whether additional protection such as ATE insurance is needed.
If you think a DBA may be right for you, the next step is to seek clear, professional advice. A properly assessed case and a well-drafted agreement can give you the confidence to move forward and pursue justice on fair terms.