Contingency Fees in Employment Tribunals

Some important - and very good - news for Claimants' solicitors...

The Damages Based Agreements Regulations 2010 have now been finalised and come into force on 6th April 2010.

Contingency fee agreements are where the representative charges a percentage of money recovered. This is not the same as a conditional fee agreements, more commonly known as 'no-win, no-fee', where the representative charges a base-fee plus an uplift in the event of success - which is unrelated to the damages recovered.

The Regulations provide that certain formalities must be met in the contingeny fee agreement, otherwise the agreement will be unenforceable and the representative will be unable to recover their percentage.

Importantly the cap on contingency fees, provisionally set at 25% when the consultation paper went out in December, has been increased to 35%. This will come as a huge relief to many advisors who traditionally charge 33%, and who thought the 25% cap would render contingency fee agreements uneconomic. Okay, the 35% includes VAT, but most Claimant solicitors will be able to live with it.

The final draft of the Regulations is not yet on the internet, but it should appear here soon. For what it's worth, the (old) draft Regulations are still available.

Incidentally, the Jackson costs report - published earlier this month - recommended revising contingency fee agreements so that barristers could also enter into them. At the moment, due to a surreal difference of opinion between the SRA (which considers employment litigation to be non-litigious), and the Bar Standards Board (which considers employment litigation to be litigious), only solicitors can enter into contingency fee agreements.