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Civil Litigation Bill Will it have unintended consequences?

Civil Litigation Bill  Will it have unintended consequences?

Concerns have recently been raised about the Bill which is planned to increase access to justice, provide equality of arms between those injured and those responsible and to protect the vulnerable.

As a solicitor acting for those who have been hurt in accidents that weren’t their fault, I have a particular interest in the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill which is currently before the Scottish Parliament’s Justice Committee. I support the aim of the bill which is to increase access to justice, provide equality of arms between those injured and those responsible and to protect the vulnerable. These are all admirable aims.

So I was interested to read the views expressed in a recent article in the Scotsman which suggests the Bill may in fact have the opposite effect.

The first concern centres around the introduction of Damages Based Agreements (DBA) which would allow solicitors to receive a percentage of the damages received. Presently, solicitors are not allowed to enter into such agreements and can only enter into Speculative Fee Agreements which provide that at the end of the case, the client has to pay a success fee which is capped at a maximum percentage but which takes into account various other factors. Its therefore not as clear cut as being able to tell a client at the outset that whatever compensation you recover, the fee you pay will be x% of that. For clients who have often never had any involvement in such matters, that can sometimes be difficult to understand and can cause them uncertainty. Being able to enter into a DBA means clients will be clear at the outset what fee will be charged. That to me, is helpful from a clients perspective.

With regard to the concerns over claims management companies (CMC), I do not foresee that things will change dramatically. The market in England has been regulated since 2006, and whilst there are further changes potentially ahead in England and Wales which will put a bigger squeeze on the CMC market, I don’t foresee that we will suddenly see an influx of CMCs in the Scottish market.

I do agree with Kate that in the highest value claims, the future losses are often the cost of necessary care but also future wage loss can make up a significant proportion of the value. Ultimately, my role in pursuing these claims is to negotiate a settlement that maximises the compensation payable to a claimant in order to cover future losses and costs as well as compensate them for past losses and the injury itself. At present, no proposed maximum percentage has been set down but it seems to be intended that there will be a sliding scale depending on the level of compensation recovered. Sheriff Principal Taylor recommended the following scale in personal injury cases:-

  • up to 20% for the first £100,000 of damages
  • up to 10% for the next £400,000
  • up to 2.5% of damages over £500,000.

On that basis, I don’t anticipate that it will be the case that a flat maximum percentage of say 25% will be applicable to all cases regardless of value. In any event, it will be a maximum percentage that will be set down, meaning that firms who do offer such agreements cannot charge more than that but can charge less, should they choose to do so.

Further, the Bill does provide some protection for claimants in that it proposes that the first £1million can be included for the purposes of the success fee calculation so long as its paid by way of a lump sum and not a periodical payment. Future losses in excess of £1million can be included for the purposes of the calculation if the claimants solicitor and the court or independent actuary recommend a lump sum as opposed to periodical payments.  Although periodical payments have been rare, it is possible that they may become more prevalent, particularly with the changes in the discount rate. This provides claimants some protection in that any payments by way of periodical payments as opposed to a lump sum cannot be taken into account when calculating the success fee.

The second concern centres around Qualified One Way Costs Shifting (QOCS). My colleague, Mike Kemp wrote about this a short time ago. The concern raised in relation to QOCS centres around CMCs. QOCS  is designed to ensure that an injured person who is ultimately unsuccessful in their case does not need to pay the court expenses of the defender, with some exceptions. I think the suggestion that introducing QOCS in Scotland would entice CMCs north of the border is without merit.

Ultimately, solicitors acting for claimants are officers of the court and have an obligation not raise court actions that have no merit and effectively waste court time. The introduction of QOCS will not change that obligation.  Further, in such situations where you are only paid for the work you do if you are successful, such as operating under a DBA, I doubt that many would want to raise court actions where they were not satisfied that they were likely to be successful – that would mean a waste of time and effort on something you thought realistically you were unlikely to win and were therefore unlikely to make money from. I accept there are some unscrupulous companies out there – but those companies exist to make money and on that basis I don’t see that they want to waste time and effort for little prospect of a return. In any event, QOCS removes the requirement that a pursuer will have to pay the defenders costs if they are unsuccessful (the usual rule of expenses following success). On that basis, I see QOCS as removing a risk for the pursuer not for CMCs who would not be the party found liable to pay the defenders expenses.

Overall, I think that Bill goes some way to meeting its aims, rather than potentially having unintended and unfortunate consequences for claimants.

Caroline Kelly is a Partner and Solicitor Advocate in our Personal Injury team. For further information, please contact Caroline on the details below.

Posted by Caroline Kelly

Partner & Solicitor Advocate

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