The London office of Jones Day is piloting the use of damages-based agreements (DBAs), making it one of the few major firms to offer these alternative fee arrangements (AFAs) since new regulations came into force in the UK earlier this year.
Jones Day already has some experience of contingent fees from the US side of its disputes practice but the structure is still effectively new to the UK market and the larger defendant-side litigation firms.
Indeed, as a recent peer panel discussion in The Lawyer highlighted, DBAs are generally seen as highly unpopular in the UK market, if they are being used at all (9 September 2013).
The news that Jones Day, one of the highest-ranked firms in this year’s Global Litigation Top 50 report (12 December 2013), has begun using DBAs in its London office will be seen as a partial endorsement of the contingency-based fee structure.
“There’s no question that at the moment we’re looking at how far we’re going to have to engage with DBAs,” revealed Jones Day London litigation head Craig Shuttleworth. “We’ve signed two or three relatively small cases so far, partly to get a feel for them and develop an internal process. We’ve just done a more substantial one in terms of our economic interest in the matter.”
Shuttleworth echoed the sentiments of many lawyers when he criticised the DBA regulations as they stand.
“At the moment we’re still basically working up the procedures to implement these fee deals and get a sense of what we’re comfortable doing,” added Shuttleworth. “The view we took was that we’d better be able to consider it even if we don’t end up doing it because it was becoming an often-discussed topic. It’s difficult to do a mixed deal but we think many clients want that. There is no doubt that these days some clients want us to have some skin in game. We’ve set up internal procedures to properly stress test it.”
Shuttleworth said that the structure his team was working on would include certain trigger points at which point the firm would share in the recovery.
“For example, if the trigger point was say £50m – which is definitely not the real number – if we hit that then we’d start sharing in the damages award. Then if it reaches £75m we’d share at a greater percentage. So there is a step ratchet in it.”
Jones Day’s estimated global litigation and arbitration revenue of $900m secured it fourth place in this year’s Global Litigation Top 50.