Damages Based Agreements review timetable problematic – Karen Dance

The reliability of the figures that will be available by June 2023 is questionable – not least due to Covid-19, writes Karen Dance
Karen Dance, Partner and Head of Scottish Business, BLMKaren Dance, Partner and Head of Scottish Business, BLM
Karen Dance, Partner and Head of Scottish Business, BLM

From 27 April, Scottish solicitors have been able to enter into agreements with clients in all personal injury claims to take a percentage share of damages as a fee for success. The legislative foundation for these Damages Based Agreements (DBAs) was laid by the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018. Another of this Act’s innovations is Qualified One-way Costs Shifting (QOCS). QOCS, likely to come into force this year, will greatly reduce the risk of an unsuccessful claimant being found liable for expenses in a personal injury court case.

The main stated aim of both DBAs and QOCS is to increase access to justice. QOCS in particular incentivises personal injury litigation. It follows that one of the ways access to justice can be measured for these purposes is the number of claims taken to court.

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Looking at official figures for personal injury litigation, they perhaps do not suggest a pressing need for law reform to enhance access to justice.

For example, whilst the number of personal injury claims taken to court in 2018/19 was three per cent down on 2017/18, the 2017/18 figure was 13 per cent higher than for 2016/17.

At Scotland’s newest sheriff court, the All-Scotland Personal Injury Court (ASPIC), 3,591 cases were raised in 2018/19, nine per cent up on 2017/18. The 2017/18 figure itself was up 11 per cent on 2016/17. ASPIC is also becoming more popular compared to other courts where Scottish personal injury litigation may be conducted. Cases raised at ASPIC in 2018/19 accounted for 39 per cent of all new personal injury litigation in Scotland that year, four per cent up on ASPIC’s share for the previous year.

Overall, the volume of personal injury litigation increased between 2016/17 and 2018/19 with ASPIC becoming more popular over that period.

Under the 2018 Act, the operation of DBAs and QOCS is to be reviewed by Scottish Ministers as soon as practicable after 5 June, 2023. The report on this review must, in particular, contain information about the effect of the operation of QOCS on access to justice. When the review occurs, however, its reliability may come into question. Added to the time already taken for QOCS to be brought into force are the effects of claims being held back from litigation until QOCS is implemented and now a reduction in new personal injury court cases being raised during the Covid-19 crisis. Contingency arrangements put in place by the Scottish Courts and Tribunals Service (SCTS) in response to Covid-19 were criticised by, for example, the Vice Dean of the Faculty of Advocates. Whilst SCTS has now allowed and enabled more business to be dealt with, significant restrictions remain. New actions are only allowed where “urgent and necessary”.

Even if data for 2022/23 is made available for the 2023 review, two additional factors look likely to add to the difficulty in drawing meaningful conclusions on QOCS and DBAs in the context of access to justice at that time. One is that further compulsory pre-action protocols appear likely to be in place by then, possibly leading to a greater but unknown number of claims resolving before they go to court. Also, rules on multi-party or group proceedings, another 2018 Act innovation, are likely to be in force by then. That might reduce the number of litigated cases because, under multi-party proceedings, a group of individuals with the same or similar claims might be able to bring claims to court in one action.

The existing statistics, suggesting limited evidence of a shortfall in access to justice, might be as reliable as any available for a considerable period.

It will also take time for the qualifications to the one-way costs shift to reveal their precise nature and extent in judicial decisions, for example where there has been “a fraudulent representation” or “manifestly unreasonable” conduct. This will perhaps add another layer of statistical uncertainty. For a full picture it would also be helpful if the post-legislative review considered the operation of the qualifications too, especially fraudulent representations and manifestly unreasonable conduct to show the full effect of DBAs and QOCS in the round.

Karen Dance, Partner and Head of Scottish Business, BLM



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