The provisions of this new act, due to the Jackson reforms, are due to come into force in April. It should not be assumed that the introduction of Damages Based Agreements (contingency fees) will dilute the seriousness of the practice over many years of HSBC and their solicitors, or make them retrospectively lawful.
The new provisions do not allow for claimants’ solicitors to front load the percentage of damages which may be payable on success , thereby inflating the claim. This means on a debt of £10,000 the solicitors, on the basis of a 16.4% fee will recover £1,640 and the client will receive £8,360. The fact remains that HSBC’s arrangement with it’s solicitors has been unlawful for many years, and would have been so even under the new reforms, especially as there was no “damages based agreement” in force or any other contractual provision for the charges to be added.