Explanatory note

These Regulations prescribe the requirements with which an agreement between a client and his or her representative must comply so as to enable it to be a damages-based agreement relating to an employment matter under section 58AA of the Courts and Legal Services Act 1990.

Regulation 2 states that an agreement is not enforceable unless it complies with regulations 3, 4, 5, 6 and 7.

Regulation 3 specifies the requirements of the agreement.

Regulation 4 specifies the information that must be given before an agreement can be made.

Regulation 5 specifies that an agreement must be in writing and signed by the client and the representative. It also specifies that additional causes of action can be added to the agreement by written and signed amendment.

Regulation 6 provides that the amount of the payment, including VAT, must not be greater than 35% of the sum recovered by the client.

Regulation 7 prevents the representative from ending the agreement unless the client has been or is being unreasonable. It also prevents the client from ending the agreement at particular stages. Finally, the regulation provides that if the agreement is ended then the representative cannot charge more than their costs and expenses for the work done in respect of the client’s claim or proceedings. Regulation 1 defines “costs” as the total of the representative’s time reasonably spent on the claim or proceedings multiplied by the representative’s reasonable hourly rate of remuneration.

An impact assessment has been prepared for these Regulations and can be requested by writing to the Ministry of Justice Private Funding Branch at: [email protected]