Aim of the Bill

The aim of the Bill is to increase access to justice in civil actions by:

• Making the costs of civil court action more predictable;

• Increasing funding options for pursuing civil actions; and

• Introducing a greater level of equality to the funding relationship between pursuers and defenders in personal injury actions.

What will this mean in practice?

The Bill is currently only at stage 1 of the Scottish parliamentary procedure so we can expect that changes to Bill will be possible as it progresses though the Parliament.  The Bill, as initially published, sets out changes in four main areas which are:

• the introduction of success fee agreements;

• changes to expenses in civil litigation;

• changes to the position of the auditors of court; and

• provision for the development of group proceedings in Scotland.

These are discussed in more detail below.

Success fee agreements

The scope of success fee agreements covered by the Bill is quite wide.  It covers all types of speculative fee agreements and damages based agreements which apply to proceedings brought or contemplated in the Scottish courts or tribunals. 

A key change introduced by section two of the Bill is the ability of solicitors in Scotland to enter into damages based agreements which is done by the removal of the bar on success agreements which relate to a share of the sums sought in the litigation (pactum de quota litis).  This was a controversial topic in earlier consultations about the funding of litigation in Scotland with arguments put forward about the clear potential for conflicts of interest to arise.  However it is of course the case that claims management companies, who are (unlike solicitors) unregulated, do have the ability to enter into this type of agreement in Scotland. 

It is proposed that those who provide legal services under a success fee agreement will be able to retain expenses which are recovered, in addition to the success fee, unless the agreement provides otherwise.  Although expense in relation to civil legal cases are excluded from the scope of this.

The Bill does propose restrictions on the scope of success fee agreements.  The Scottish Government is provided with the power to put in place a cap on the maximum amount of a success fee which can be provided for under a success fee agreement.  Certain types of proceedings may also be excluded from the scope of success fee arrangements. The Bill proposes an exclusion for family proceedings and also a power for the Scottish Government to specify other types of proceedings in regulations.

Specific provision in relation to personal injury cases provides that a client will not be required to make any payment other than the success fee (with the exception of insurance premiums).  This will mean that outlays incurred in connection with the claim would need to be settled by the solicitor from expenses recovered and the success fee.  Restrictions are also set down in relation to the recovery of success fees from damages related to future loss. 

It is also proposed that the Scottish Government have the power to make regulations about the form and content of success fee agreements.  As ever, the devil will be in the detail and there will remain much to consider about there operation of success fee agreements following the passing of the Bill. 

Changes to expenses

A first change to the operation of expenses in civil litigation is the introduction of qualified one way costs shifting which is set out in section 8 of the Bill.  It provides that, in personal injury cases, the court is prohibited from making an award of expenses against a pursuer who has conducted proceedings in an appropriate manner. This is to apply to personal injury claims and appeals.  A pursuer will be considered to have conducted a litigation in a reasonable manner unless they (i) make a fraudulent representation, (ii) behave in a manner which the court considers falls below the standards reasonably expected, or (iii) conducts proceedings in a manner the court considers amounts to an abuse of process.

Other changes in relation to expenses including giving the court the power to make an order for expenses to be awarded to a charity (which has been designated for this purpose by the Lord President) and provision of expenses where a third party is funding a litigation. Section 10 of the Bill  provides that awards of expenses may be made against persons providing financial assistance to a party involved in civil proceedings where the person has an interest in the outcome of proceedings even although they are not a party to proceedings.  There are requirements for the party receiving assistance to disclose information about this, including the identify of the funder, to the court.  There is also provision for awards of expenses against legal representatives who commit a breach of their duties to the court.

Auditor of Court

The role of auditors of court continues with them all being put on a statutory basis (where at present this only exists for the Auditor of the Court of Session).  The Scottish Courts and Tribunals Service is to be responsible for the appointment of auditors.  It will no longer be the case that an individual commission as a sheriff court auditor would only cover one sheriffdom.  Guidance for auditors is to be issued by the Auditor of the Court of Session.

Group Proceedings

The changes in part 4 of the Bill which introduce group proceedings will be the Scottish form of what is in, in other jurisdictions, referred as a "class action".  This allows for a person, who is referred to as a representative party, to bring proceedings on behalf of two or more persons who have separate claims which may be the subject of civil proceedings.  There is no cap proposed on the number of members who may be part of the group. 

An opt in approach has been adopted as individuals will have to explicitly consent to becoming part of the group procedure before their claim will be determined by the group proceedings. The permission of the court will be required in order for group proceedings to be brought.  It is intended that group proceedings will be available in either public law matters (judicial review proceedings) or private law matters.  The Court of Session is provided with authority to issue rules detailing the procedure.

We will need to wait until the Bill has passed and, indeed, for the publication of secondary legislation to give us the full detail of the impact of the changes.  However there is no doubt that, in whatever their final form, these changes will have a significant impact for parties raising litigations in Scotland.  We will be watching the development of the Bill with interest.