New era for civil litigation funding

The Court of Session, Edinburgh. Picture: Toby Williams

When Sheriff Principal James Taylor was invited by the Scottish Government to carry out a root and branch review of the funding of civil litigation in Scotland to modernise the system and widen access to justice, he could have been forgiven for feeling daunted by the monumental task that lay ahead of him.

Two years later, his Review of Expenses and Funding of Civil Litigation in Scotland now published, the former Sheriff Principal of Glasgow and Strathkelvin has struck a deft balance between the competing interests of the parties involved in litigation – individuals, small businesses, major corporations and legal advisers – to produce a report that promises a new era of modernisation, efficiency and effectiveness for the Scottish court system.

His 85 recommendations show that access to justice can be widened, and Scottish courts made a more attractive forum for resolving commercial disputes, not by sweeping away the current arrangements but rather by adapting and amending them, while at the same time proposing some interesting and genuinely radical new approaches.

Modernisation of litigation process in Scotland and England

This report is not one prepared in isolation. It is one of a trilogy of reports concerning the modernisation of the litigation process in Scotland and England. Firstly, Lord Gill’s Report of the Scottish Civil Court Review was published in September 2009. There then followed the Review of the Civil Litigation Costs in England and Wales under the chairmanship of Lord Justice Jackson, published in December 2009. As the Scottish Civil Court Review decided not to address the issue of litigation expenses, it was left to Sheriff Taylor to complete the picture with his own report.

While Sheriff Taylor clearly has one eye on the reforms introduced in England and Wales by Lord Justice Jackson he has certainly not followed them slavishly and, on occasion, admits to coming to radically different conclusions. One example is his departure from the position taken south of the Border to ban all referral fees. Instead, he recommends that regulated bodies should be entitled to charge them.

Sheriff Taylor admits that, on occasion, he has taken what may be considered by some to be a “rather over-cautious approach” with regard to certain changes. He considers this to be necessary in the case of some issues to avoid the satellite litigation which has “bedevilled the courts in England and Wales”. Pilot schemes in certain instances are, he suggests, appropriate because “predicting how lawyers will react when the financial dynamics and incentives are altered is very difficult”.

Commercial clients will certainly welcome the specific proposals designed to reduce the shortfall between the cost of commercial litigation and the sums recovered from the opponent. Sheriff Taylor’s aim is to allow for 80 per cent of costs to be recovered by a successful party in commercial cases. Pilot schemes are also proposed to give commercial courts a new role in managing and controlling the level of expenses to make it far easier for parties to predict the expenses involved in the litigation. If successful, similar rules may be applied to other types of civil action.

Efficient litigation

The funding of claims, particularly in personal injury cases, is to be altered by the abolition of the current ban on solicitors accepting a percentage of the sums awarded by way of fees, in return for agreeing to act on a “no win no fee” basis. This kind of “damages-based agreement” will operate alongside the existing speculative fee arrangements but the rules will be amended to limit the extent of the success fee the solicitor can charge the client in the event of the successful resolution of the claim.

Sheriff Taylor also proposes that, in personal injury cases only, there will be qualified one-way cost shifting which allows a pursuer who seeks to claim damages from the wrongdoer to do so without having to pay his opponents expenses in the event that his claim fails, except in very limited circumstances.

Underpinning the proposals is a move towards far more efficient litigation designed to speed up the process for resolving disputes, improving access to justice for all litigants and allowing for a much greater degree of certainty on costs at the start of the litigation. Further, the report considers a number of funding options which ought to be available and fully explained to the client at the start of litigation so they can make a fully informed decision.

The report’s proposals, if implemented, will be instrumental in improving the process of litigating in Scotland and will put Scottish courts on the international stage as a forum to litigate complex and cross border disputes. Only time will tell whether these recommendations will be accepted and implemented but anything short of wholesale acceptance will be a missed opportunity.

• David Armstrong is head of litigation at Brodies LLP

www.brodies.com

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