Success fee agreements: analysis of consultation responses

Introduction and summary

1. The Scottish Government launched its consultation on Part 1 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 on 8 November 2018. The consultation, which dealt with success fee agreements, closed on 31 January 2019. As the Government proposals for the content of the secondary legislation necessary to fully implement the provisions of Part 1 have not been consulted upon, it was considered appropriate to seek stakeholders’ views on its thinking.

2. There were twenty-five responses to the consultation. The breakdown of respondents is as follows:

As the two individuals were also solicitors, though one was not a practising solicitor, over three-quarters of the responses came from the legal sector.

3. The Scottish Government is grateful to all those who responded. These responses will be taken into account as the Government takes the next step which is to draw up the regulations that will implement Part 1. These will in due course be laid before the Scottish Parliament.

4. Question 1 was concerned with the caps on the amount of success fee that the service provider will be allowed to uplift. The general trend was that pursuer groups were content with the caps recommended by Sheriff Principal Taylor in the Review and that defender groups considered that the suggested caps were too high. The one claims management company suggested that the caps were too low.

5. Question 2 related to the prohibition of success fee agreements in relation to family proceedings but possibly other kinds of proceedings as well. Only the Faculty provided information on speculative fee agreements and family proceedings. There were more views expressed in other kind of proceedings which are not appropriate for the use of success fee agreements and particularly damages based agreements. Those representing defenders suggested that success fee agreements were not appropriate when the pursuer does not have legal capacity or where liability has been admitted in full pre-litigation. Two respondents were concerned about success fee agreements being used where the success of an action was not about an award of damages. Finally, the one claims management respondent appeared to consider that damages based agreements were suitable for family proceedings.

6. Section 7(3) and (4) of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 gives the Scottish Ministers power to make further provision about success fee agreements by regulations. Question 3 sought views on what further regulatory provision about success fee agreements. Unlike the responses to questions 1 and 2 where pursuer and defender respondents showed marked differences of opinion, there was no clear similar pattern in the responses relating to this question. However, it should be noted that there was general agreement that it is not possible to calculate what the anticipated damages might be at the outset of a success fee agreement.

7. Paragraph 43 of the consultation considered the situation where the provider comes to the conclusion that the recipient is unlikely to win and the provider withdraws from the agreement but where the recipient engages another provider and is successful. The question was whether the recipient should be responsible for the original provider’s fees and outlays up to the point when the agreement is terminated by the provider. This was an arrangement generally opposed by respondents with only 3 out of 14 responses favouring this arrangement. None of the defender respondents were in favour and there was also some opposition to the arrangement from some of the pursuer respondents.

8. Question 5 asked whether formal Government regulation is required to make it clear that providers of relevant services may not provide legal aid when a success fee agreement is in prospect or in place. Just over 70% thought that formal government regulation was required. Some of the pursuer respondents made the distinction between advice and assistance on the one hand and civil legal aid on the other with advice and assistance being available for the investigation of potential claims whereas some defender responses were opposed to this. There was general agreement that civil legal aid should not be available once a success fee agreement was in place, though three pursuer respondents considered it should be available in clinical negligence cases owing to their complexity.

9. Question 6 was concerned with whether formal Government regulation was required in relation to any change in funding, whether from legal aid to a success fee agreement, or the other way about, requires in relation to information/notification requirements or case-end formalities. The responses to this question were split. Some, including SLAB (the Scottish Legal Aid Board) considered that Government regulation was necessary, others were not convinced with the suggestion from one pursuer solicitor and the Law Society that guidance from SLAB and the Law Society was sufficient.