Litigants’ expectations would alter in new regime

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Picture: Getty
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THE Taylor Review of expenses and funding of civil litigation in Scotland is without doubt the most important, comprehensive review of litigation funding ever carried out in Scotland.

If its recommendations are implemented, it will change the litigation landscape beyond recognition and litigants, both businesses and private individuals, will have to alter their expectations.

Key to the review is access to justice for all, in particular those in the middle who are most often denied access to the civil justice system. With that objective in mind, the review makes 85 recommendations, of which three in particular seem likely to have a significant impact: funding, expenses and risk shifting in personal injury cases.

The availability of funding is key for access to civil justice; even with a good case, without funds you may not be able to pursue it effectively. There are already a number of funding options available, including insurance and speculative agreements (no-win, no-fee), but these are not considered to be offering pursuers sufficient choice.

The review recommends allowing Damages Based Agreements (DBAs).Under a DBA, the solicitor receives a percentage of the damages awarded to the pursuer (claimant) as their fee. These arrangements are not currently permitted under Scottish professional practice rules, but those rules can be changed.

For those new to litigation, it can come as a shock to learn that even if successful you will not likely recover all of your legal expenses from the other side. Currently you may end up recovering only 50-60 per cent of your actual legal costs. Therefore the amount you end up with “in the hand” can be significantly less than the amount you are awarded.

The Taylor Review doesn’t recommend increasing recoverable rates but it does suggest a review of rates by a panel including insurers, a sheriff and someone representing consumer interests.

Risk shifting

Risk shifting in personal injury claims is one of the most dramatic recommendations in the review. Currently there is risk on both sides, as whoever is unsuccessful will usually have to pay the other’s judicial expenses. That risk is one consideration when deciding whether or not to pursue or defend a claim, and in making or accepting an offer of settlement. The Taylor Review notes that many with good claims are unable to pursue them because they cannot risk losing and having to pay the other legal expenses. Taylor therefore recommends that unsuccessful pursuers should not have to pay any of the defender’s expenses. This is good news for pursuers but obviously not so good for defenders. Taylor’s reasoning is that the pursuer is likely to be a private individual, whereas the defender is likely to be insured so won’t be paying personally, and the pursuer needs a helping hand to address this imbalance. However, a pursuer who instructs a solicitor on a DBA basis will not have to pay any legal fees unless their claim is successful; if unsuccessful they pay nothing, either to their own solicitor or to the defender. They therefore have no risk. Faced with a pursuer with no risk there will be considerable pressure on defenders to settle, even where they have a defence with reasonable prospects of success. This change, if implemented, will fundamentally alter the dynamic in personal injury cases. We are not convinced that this blanket shifting of risk is necessary or advisable.

It remains to be seen how many of the review’s recommendations are implemented. A change in our professional rules could allow DBAs to be brought in quickly; if the recommendation on recoverable expenses is implemented, a panel will be set up to consider the rates, with its recommendations then being considered before any changes are made, while shifting the risk in personal injury cases requires a change in the law and so will take some time to implement. It is very much a case of watch this space!

• Barbara Bolton is a partner in Tods Murray’s litigation and dispute resolution department

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