KA-2025-000017 - [2025] EWHC 2311 (KB)

The appellants argue that parties are entitled to agree as an expression of their freedom to contract that counsel’s fees should be charged as expenses. Relying on Zuberi, it is submitted that client and lawyer may “structure the allocation of risks as to the cost of litigation so long as the central concept of the contingency payment remains at the heart of the agreement.” The appellants submit that the lay clients and solicitors have freely contracted that counsel’s fees should be deemed an expense and thus beyond the bounds of the DBA contingency payment. This is because “it could be commercially very serious not to provide for who pays counsel's fees.” It is submitted, that as in Zuberi, this separate bargain may be treated as distinct from the DBA. The appellants cite Lewison LJ at para 33:

“… a DBA is a contract which includes a provision for sharing recoveries. But another view is that if a contract of retainer contains a provision which entitles a lawyer to a share of recoveries; but also contains other provisions which provide for payment on a different basis, or other terms which do not deal with payment at all, only those provisions in the contract of retainer which deal with payment out of recoveries amount to the DBA.”

The submission is that if the parties expressly choose to classify counsel’s fees as an expense in the DBA, then they are entitled to do so outside the core DBA provisions regulating payment of a share of the financial benefit. On this analysis, the arrangements for counsel's fees amount to a collateral agreement as to where the risk of under recovery of counsel’s fees will fall, and the client has agreed to that risk. This is a legitimate “two-speed” or hybrid agreement, and the expenses clauses should be permitted to stand separately from the core DBA. The respondent disputes this interpretation of Zuberi.