Stronachs Logo

To date solicitors have been restricted in the types of fee arrangement that can be offered to clients. For example, solicitors have been unable to charge a fee based on the percentage of sums awarded in a litigation.

                                                                                                                                                                                                             

However, with a view to increasing access to justice and following the Taylor Review, the Scottish Government have introduced the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill which, if passed, will revolutionise the way in which solicitors and the civil courts will deal with expenses. It will give increased flexibility in the arrangements between solicitor and client in funding litigation.

Success Fee Agreements

Part 1 of the Bill provides that solicitors will now be permitted to enter into success fee agreements with clients. This is an agreement whereby the client will agree, in writing, to pay a success fee if they are successful in their claim and may not need to make any payment at all if the action is unsuccessful or would be required to make payment of a lesser sum than the success fee. However, should the client obtain an award of judicial expenses it will be presumed that the legal advisor will also retain those expenses in addition to the success fee. This would mean that clients would not have to make payment of fees based on an hourly rate. It will also mean that solicitors will need to think carefully about the value of an action and assess the appropriate level of success fee. It would be expected that riskier litigation is going to have a higher success fee attached to it. The Bill does propose that the Scottish Ministers may introduce a cap on the percentage of a success fee that can be charged.

It will also be open to the Scottish Ministers to determine which categories of work are not suitable for success fee agreements. At this time the draft bill specifically identifies family proceedings, such as actions of divorce or actions relating to residence of a child etc. as being excluded.

Expenses in Civil Litigation

Generally, if you are successful in a Court action you will be entitled to recover your judicial expenses from the other side. Therefore, the risk of expenses being awarded against you is a big consideration when assessing the acceptability of any settlement proposal. This rule applies equally to personal injury actions.

However, the Bill provides that a person making a claim for damages either in relation to their own injury or the death of a relative, providing that they have conducted themselves in an appropriate manner, would not have expenses awarded against them.

This will of course raise concerns for Defenders as they may find that Pursuers are taking a far more robust position in negotiation because the financial risk in pursuing the action would be minimal. I expect that it is therefore likely that we will see case law develop that will examine how to determine if the conduct of a Pursuer has been appropriate in order to determine when successful Defenders might be entitled to recover judicial expenses.

Third Party Funding

Under the Bill if a client is receiving third party funding in order to pay for their litigation/defence, the identity of the funder, nature of the assistance and the financial interest that the funder has in the outcome of the action must be disclosed to the court. It would be possible for the court to make an award of expenses against a third party funder or any intermediary.

Comment

These changes represent a fundamental shift in the way that parties will assess risk in relation to litigation in Scotland. It sees a movement towards the English system, especially in connection with the changes relating to personal injury litigation. The Bill, if passed, will allow solicitors to consider offering types of fee charging agreement that were previously prohibited. It also represents a continued movement towards encouraging early settlement of personal injury actions by placing the majority of the risk on a Defender.

It is a case of wait and see how this Bill progresses but it certainly seems like good news for Pursuers, especially in personal injury actions.

Deborah Edon, Associate

Chambers UK 2106

Contact Info

ABERDEEN OFFICE
28 Albyn Place, Aberdeen AB10 1YL
Tel: +44 1224 845845

 

INVERNESS OFFICE
Camas House, Pavilion 3, Fairways
Business Park, Inverness IV2 6AA
Tel: + 44 1463 713225

The Legal 500 logo