In Lexlaw Ltd v Zuberi [2020] EWHC 1855 (Ch), law firm Lexlaw sued their client for non-payment of fees, having worked for her on a financial mis-selling claim against two banks on a DBA basis for a number of years, resulting in the banks making her an offer of more than £1m.
She argued the DBA was void and unenforceable as it included an obligation for her to pay legal costs and expenses in the event of early termination. However, Judge Parfitt held the DBA was valid.
Ali Akram, senior partner at Lexlaw, said: ‘Although the DBA Regulations permitted us to seek up to 50% of the damages, we agreed to conduct this complex and specialist litigation and the review scheme work for only 10% plus VAT.
‘Our robust litigation work against the banks endured for several years and resulted in a financial benefit to the client in excess of £1m; yet the client steadfastly refused to pay. HHJ Parfitt’s landmark judgment provides welcome judicial clarity on the validity of early termination payment clauses in DBAs which in turn promotes access to justice as more legal professionals will now be willing to enter into such funding arrangements.’
Karim Oualnan, partner at Lexlaw, said: ‘It is common knowledge that the DBA Regulations 2013 have a number of serious drafting gaps and thereby have to date failed to achieve their goals.
‘Where a joint venture approach has been agreed and the risk of funding a claim to conclusion has been taken up by a legal professional and success has been achieved, it is clearly inequitable to seek to evade fair payment. Such an outcome could never have been Parliament's intention yet the drafting of the regulations allowed such meritless argument.
‘This is an important judgment for lawyers and clients equally as it provides much needed judicial clarity on the effect of termination in respect of DBAs in litigation matters but more needs to be done and the recommendations of the Civil Justice Council’s DBA Regulations Reform Project (An Independent Review of the DBA Regulations 2013) need to be progressed.
‘I hope that this judgment will go some way in putting DBAs (and amendments of the DBA Regulations) back on the agenda as a means of promoting and furthering individual access to justice particularly during these unprecedented and uncertain economic times.’
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