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Scotland Update – Group Actions and Funding

Scotland Update – Group Actions and Funding

Scotland likes to forge its own path. That much has been reaffirmed by the General Election results last week.

But in the civil litigation arena, changes proposed in relation to group claims and funding apply features that have been part of the fabric of proceedings in other countries for some years.  As I reported in my blog in April, these will have a significant impact on how litigation is conducted in Scotland.  These changes are set out in a Bill recently published by the Scottish Government, the niftily entitled Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill.

The Bill proposes a new group procedure.  This is no doubt partly in response to the often haphazard experience of how multiple claims are currently handled in Scotland, in particular in various product liability claims.  These have exposed a gap in procedure and knowledge of how best to deal with large numbers of claims at the same time.  The devil is in the detail, and that is left over for a later date.  Principally, however, it is an opt-in, not opt-out, procedure.  Even if a pursuer (claimant) ‘opts in’, there would be a permission stage for group proceedings to be brought, the test being whether there are issues of fact or law which are the same or similar or related to each other.  This test seems fairly broad, and there is likely to be lengthy debate on the interpretation of this wording at the permission stage alone.  The group procedure would also allow proceedings to be brought by third party bodies such as consumer organisations.

On the funding side, damages based agreements would be permitted for solicitors in Scotland for the first time.  This is where a success fee can be charged as a percentage of the damages awarded in a case on top of a solicitor’s normal fee.  This is a significant addition to the funding options available for claims.  However, experience elsewhere suggests that the impact of DBAs may be more modest than expected, and it remains to be seen how firms in Scotland gear up to offering these to clients.  Will a firm’s ability to offer these become a critical part of a client’s choice about who to instruct?  There will be sliding caps on the amount of a damages award that can be included in a success fee, which might also make them unattractive at a certain level.

The Bill also proposes to introduce QOCS (Qualified One Way Costs Shifting), which means that as a general rule a pursuer bringing a personal injury claim will not be liable to pay costs to a defender (defendant) even if they lose.  This is a radical change of culture in our ‘loser pays’ jurisdiction, designed to address what is perceived to be an unfair balance between individual pursuers on the one hand, and on the other hand defenders who (it is considered) mostly have insurance to cover a claim. Again it will be interesting to see how much difference this makes in practice. Some defenders might not have expected or sought to recover costs from an individual for a variety of reasons, for instance where there was no likelihood of recovery or for PR reasons.  Also, insurance may not be available to a defender for example depending on the amount involved.  There has also been a view that the prospect of having to pay costs might have been a useful deterrent to potentially unmeritorious claims.  Whether that is a valid point will have to be reviewed in light of experience of the new regime.

Lastly, third party funding would be opened up to more scrutiny than in the past.  This can have a profound impact on how a claim is handled, and if and when it can be settled, but to date there has been no transparency.  The Bill places an obligation to disclose the identity of the funder and any intermediary, the nature of the funding, and what the funder will receive at the end of the case.  It also allows the court to make an award of costs against the funder and any intermediary.  This might put off potential funders, or mean that they are only prepared to fund the strongest claims.

The Bill is short, and the detail will have to be thrashed out.  No doubt lessons learnt on these proposed changes in other countries will help inform their precise implementation in Scotland. We can hopefully adopt the bits that have worked best, and leave out the rest: a ‘pick n’mix’ approach.  Imagine if we could have done that on polling day.

Joanna Fulton

Burness admin