All I want for Christmas is… Clarity on DBAs?

This year saw further clarification regarding the use of DBAs in the form of the case of Zuberi -v- Lexlaw [2021] EWCA Civ 16.

In this case Mrs Zuberi (Claimant) entered into a DBA with the Defendant whereby it had a clause that the Defendant would receive 12% of monies received by the Claimant if she were to be successful in her claim.

The agreement also had a clause that if the Claimant terminated the DBA prior to the conclusion of the claim, she would be liable for the Defendant’s costs of work undertaken.

The Claimant was successful in her claim and the Defendant therefore sought to recover their 12% under the terms of the DBA. The Claimant argued against the same on the basis that the early termination clause breached regulation 4(1) of the Regulations.

At the time, whilst it was acknowledged that costs were recoverable in employment matters if there was termination, it was unknown and untested whether the same applied in non-employment matters in respect of early termination.

Thankfully for those who are tempted to enter DBAs, both the High Court and Court of Appeal found in favor of the Defendant and they were able to recover their 12%.

Conclusion

A useful conclusion/comment was provided by Nicholas Bacon QC who acted for the Bar Council as intervener in the case;

‘Any solicitor doing DBA work should certainly include provision now in the agreement that allows them to be paid something for the case if the client terminates the agreement, or the client breaches it. That is solid, sound, safe territory now… But those who are more adventurous, who might well be doing a whole basket of DBA cases, may well want to put in a clause that says, “if we lose, we’re going to be paid, say, half an hourly rate or a discounted fee”, on the back of that judgment’.

To read the full case, please see here.

If you have any questions regarding this summary case law please contact Karl Robson here

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