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The government recently published draft regulations aimed at restricting the use of damages-based contingency fee agreements in which the representative receives a proportion of the damages awarded to the client. They are unlawful in the United Kingdom (although not in the United States of America) for court proceedings but are quite common in Employment Tribunal proceedings, as a reflection the fact that awards are usually relatively small and clients rarely recover their legal costs. Few people question that some regulation of the terms of such agreements is necessary but there has been criticism in the Law Gazette of the cap of 25% that is planned to be imposed upon the proportion that can be agreed.
At Employment Law Advocates, we largely support the concerns which are expressed in that article. Although, regrettably, we did not take part in the original government consultation, we have recently submitted comments about the draft regulations to the Ministry of Justice. They can be uploaded here.
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