Success fee agreements: consultation on Part 1 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018
Consultation on Scottish Ministers' powers to cap success fees, to regulate which cases are not suitable to be funded by damages based agreements, and to make further regulatory provision about success fee agreements.
Terms used in this consultation
Act of sederunt
Delegated legislation passed by the Court of Session to regulate civil procedure by rules of court in the Court of Session, the Sheriff Appeal Court and the sheriff court.
Court action regarding a civil claim for damages or another civil remedy as opposed to a criminal case.
Claims management company or ‘CMC’
Companies or other bodies which provide ‘claims management services’ which, under section 1(2) of the 2018 Act, means services consisting of the provision of advice or services, other than legal services, in connection with the making of a claim for damages or other financial benefit, including—
(a) advice or services in relation to—
(i) legal representation,
(ii) the payment or funding of costs associated with making the claim,
(b) referring or introducing one person to another,
(c) making inquiries,
An advocate or a solicitor-advocate instructed by a solicitor.
A sum of money awarded by a court or agreed by settlement between the parties to civil litigation as compensation for a wrong or injury.
Damages based agreement
A type of success fee agreement under which the success fee of a lawyer or claims management company is calculated as percentage of their client’s damages received if the case is won, but no fee is payable if it is lost (though a lower fee may be payable in commercial cases). The calculation of the success fee is more straightforward than under a speculative fee agreement. The success fee will be subject to the caps to be set in regulations by Scottish Ministers under section 4 of the 2018 Act.
The individual against whom or the body against which a claim is made.
Future loss damages
Future loss damages are the part of damages which may be awarded by the court (or which form part of a settlement) in personal injury cases which are intended to compensate the pursuer for loss of future earnings or future care as a result of their injuries – they therefore relate to future, rather than past, loss.
The expenses of raising and conducting a case which a successful party will seek to recover from the unsuccessful party in litigation on the basis of an award of court.
The cost of raising and conducting a case, including matters such as the court fees and any fees of expert witnesses. Under section 6(2) of the 2018 Act, such outlays must be borne by the provider of relevant services under a success fee agreement in a personal injury case and not the recipient.
The body which conducts the case on behalf of a pursuer under a success fee agreement, who is the recipient of those services. The provider will usually be a firm of solicitors or a claims management company.
The person making the claim. Sometimes known as a claimant.
The person who is receiving relevant services from a provider under a success fee agreement. The recipient is therefore the pursuer who is making the claim.
Speculative fee agreement
A type of success fee agreement introduced by section 36 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 in terms of which an enhanced fee will normally be charged by a solicitor in the event of success. The success fee is calculated either with reference to the fee element of the judicial expenses payable by the unsuccessful party or by reference to the hourly rate agreed by the solicitor and client. The success fee under a speculative fee agreement is not damages based, but it will still be subject to the caps to be set in regulations by Scottish Ministers under section 4 of the 2018 Act.
Fees that will be paid out of damages awarded or agreed by successful parties to their lawyers or claims management companies under a success fee agreement.
Success fee agreements
Success fee agreements can be either speculative fee agreements or damages based agreements – both are kinds of 'no win, no fee’ agreement. In Scotland success fee agreements offered by lawyers have until now been in the form of speculative fee agreements, but following implementation of Part 1 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018, lawyers will be able to offer damages based agreements. Claims management companies can also continue to offer damages based agreements. Except in the case of personal injury cases, success fee agreements may be entered into on a ‘no win, lower fee’ basis.
In order to avoid the expense of a full court hearing of the case, a defender might make a formal offer to a pursuer to settle a case. Such offers are known as ‘tenders’ in Scotland.
Email: Michael Green
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