Funding civil litigation – change on the horizon

The Scottish Parliament has recently published the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill taking forward Scottish Government proposals to change the way civil litigation is funded. This follows on from Sheriff Principal Taylor’s Review of Expenses and Funding of Civil Litigation in Scotland in 2013.

The principal policy behind the Bill is to “increase access to justice by creating a more accessible, affordable and equitable civil justice system”. The Bill seeks to make the costs of civil actions more predictable and expand on the funding options available to Pursuers.

A number of proposals are introduced within the Bill such as entitling a Pursuer to enter into a ‘success fee arrangement’ (an agreement between the Pursuer and his/her legal adviser which means the legal adviser is entitled to a percentage of the Pursuer’s damages if successful).

Under Section 3 of the Bill a success fee will not prejudice the Pursuer’s legal adviser’s entitlement to recover and retain any court awarded expenses in addition to the success fee.

Provision is made for Scottish Ministers to introduce a cap on the level of success fee by making regulations on the maximum amount which can be agreed. There are however no details in the Bill to suggest what the level of any cap might be.

Perhaps of more significance is the proposal within the Bill to introduce Qualified One-way Costs Shifting (QOCS) for personal injury actions. That is where a Pursuer will be entitled to recover expenses if successful but not be liable for the Defender’s costs if unsuccessful.

Section 8 of the Bill introduces a restriction on a Court making an award of expenses against a Pursuer who brings a claim for personal injury. If passed this will effectively eliminate the risk that a Pursuer may be found liable for the Defender’s expenses if unsuccessful.

There are a number of limited exceptions where this restriction will not apply. These are where the Pursuer makes a fraudulent representation in connection with the Court proceedings, behaves in a manner which falls below the standards of a reasonably expected party of civil proceedings, or otherwise conducts the proceedings in a manner which amounts to an abuse of process.

Third party funding is also dealt with by the Bill which provides that the identities of third party funders must to be disclosed to the Court.

Section 10 of the Bill provides where a person receives financial assistance from another person in proceedings, the party receiving such assistance must disclose the identity of the funder, the nature of the assistance provided, and the financial interest the person has in the outcome of the proceedings after the substantive issues in dispute have been resolved.

The Bill also grants the Court the power to make an award of expenses against the third party funder or any intermediary.

Section 11 of the Bill also gives the Court the power to make an award of expenses against a party’s legal representative if the Court considers the representative has committed a serious breach of his or her duties to the Court.

The Bill is currently in its infancy within the Parliamentary process and it remains to be seen whether the Bill will be passed in its current form without amendment. However it is clear that the passing of this Bill will radically change the landscape of civil litigation funding in Scotland.

The Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill can be found here.

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