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.

Chapter 1: Introduction


1. A review of the Civil Justice System was undertaken in 2007-2009. It was chaired by Lord Gill, then the Lord Justice Clerk, and the outcome was published in September 2009 as the ‘Report of the Scottish Civil Courts Review’[1]. The Scottish Government broadly accepted the recommendations of the Review and much of it was implemented in the Courts Reform (Scotland) Act 2014 (‘the 2014 Act’) and in rules and other secondary legislation under the 2014 Act.

2. In the Scottish Civil Courts Review, Lord Gill recommended that there be a further review of the expenses and funding of civil litigation. The then Minister for Community Safety and Legal Affairs, Fergus Ewing MSP, announced on 4 March 2011 that Sheriff Principal James Taylor had been asked to undertake ‘The Review of Expenses and Funding of Civil Litigation in Scotland’. Sheriff Principal Taylor began the review in May 2011 and the final report was presented in September 2013[2].

3. The Scottish Government broadly accepted this review and approximately half of its recommendations have been provided for in primary legislation through the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 (‘the 2018 Act’). Recommendations on sanction for counsel in the sheriff court were implemented in the 2014 Act. Most of the other recommendations are more suitable for implementation through court rules and other secondary legislation and are being, or have been, considered by the Scottish Civil Justice Council.

4. In parallel to the legislative process for the Bill for the 2018 Act, the Scottish Parliament gave legislative consent to the introduction of claims management regulation in Scotland by means of the Westminster Financial Guidance and Claims Act 2018. The regulatory authority will be the Financial Conduct Authority who, in the case of England and Wales, is taking over the regulatory functions of the Claims Management Regulator. This new regulatory regime is expected to be operational from April 2019 and thus claims management companies’ provision of success fee agreements will be regulated in Scotland for the first time by both the 2018 Act and by rules of the Financial Conduct Authority. Similarly, legal services providers will be regulated by both the 2018 Act and by the professional rules of their professional body.

5. HM Treasury consulted on the regulation of claims management services in secondary legislation under the Financial Guidance and Claims Act 2018 from April to June 2018 and its response to views expressed is now available along with an updated draft statutory instrument[3]. The FCA consulted between June and August 2018 on draft rules on how it plans to regulate claims management companies from 1 April 2019[4]. FCA has already held meetings with interested parties in Scotland to inform its new role north of the Border.

Purpose of this paper

6. This consultation is concerned with powers conferred on the Scottish Ministers in Part 1 of the 2018 Act to make the secondary legislation necessary to fully implement the provisions of Part 1. Part 1 is not yet commenced and the Government proposes to fully commence it at the same time as the regulations described in this consultation paper.

7. In Chapter 2 of this paper, we describe the background to success fee agreements before seeking views on the level of caps that will restrict the amount that providers of relevant services can charge their clients and thus make the expense of litigation more predictable for the client.

8. In Chapter 3 of this paper, we consider one particular type of success fee agreement, the damages based agreement. These are already popular with those considering civil action due to their basic simplicity and Sheriff Principal Taylor believed that their use would further increase. The Scottish Government does not, however, consider that damages based agreements will be suitable for all types of civil cases and seeks views on what types of case should be excluded.

9. Finally, in Chapter 4, we look at what further regulatory provisions might be required for success fee agreements. The purpose is to ensure that all such agreements meet minimum standards so that, firstly, pursuers are protected, and secondly, anyone who is ‘shopping around’ may be reasonably confident that they are comparing ‘like for like’.


Email: Michael Green

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