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Scotland Update - Litigation Funding

Scotland Update - Litigation Funding

You could be mistaken for thinking that the only thing going on in Scotland at the moment is the independence debate.

Not entirely so.  Included in the Scottish Government’s legislative programme for 2016/17 is the Expenses and Funding of Civil Litigation Bill.  We understand this is due to be published in May.

If passed, this will have a profound impact on the way litigation is conducted in Scotland, and may open the door to cases, including product liability cases, that would previously never have been able to get off the ground.

The aim is to increase funding options and create greater predictability of the costs of litigation, and significantly for product liability cases, there is a particular focus on personal injury actions to attain equality of funding.

The Bill will include provisions to:

  • introduce sliding caps for success fee agreements in personal injury and other civil actions
  • allow damages-based agreements
  • introduce qualified one-way costs shifting (QOCS) for personal injury cases and appeals
  • allow for the introduction of a multi-party action procedure in Scotland.

Through these measures, the Bill aims to provide a “package” of funding options for potential pursuers (claimants).

Speculative fees have long been permitted in Scotland, but rather than allow market forces to dictate the level of success fee that can be charged, the maximum success fees in personal injury actions would be capped – a cap of 20% on the first £100,000 of damages, 10% between £100,001 and £500,000, and 2.5% over £500,000.

The cap in other civil actions would be 50% of the monetary award recovered.

Damages based agreements (where a lawyer’s fee is calculated as a percentage of the client’s damages if the case is won but where no fee is payable if the case is lost) would be permitted for the first time in Scotland.

The same caps would apply.  For personal injury actions, it would be no win no fee, although in commercial cases it could be no win lower fee.

Regulation of claims management companies appears to be ruled out, instead there would be a statutory framework for anyone offering DBAs, and agreements would be voidable if not complied with.

The introduction of QOCS, where a pursuer would not be liable for a defender’s costs if they lost, is another major development. 

This is the result of a somewhat damning indictment of the ATE market in Scotland – “a sellers’ market”.  QOCS would apply for all personal injury actions.  The consultation dismisses concern that this could open the floodgates, viewing solicitors as the gateway beyond which unmerited claims would be unlikely to pass. 

Lastly, it appears the Scottish government is going to include something on multi-party actions. Large groups of claims have been a particular feature of product liability litigation in Scotland in recent years, and the court’s management of these has not been without controversy.  Three options have been proposed, ranging from a GLO-style procedure, to a full class action procedure, to class action plus.  It is not clear which way the Scottish government will go, but any one of these would be a dramatic change. 

Joanna Fulton
Director

Burness admin