2 major changes for personal injury litigation from new Scottish legislation

According to comScore, 50% of all online searches will be conducted by voice by 2020.

40% of adults already use voice search at least once per day (according to Location World).

Sound (sorry) advice for websites wanting to optimise for voice search – which is good advice about how to write website content, generally – is to ensure that your content has an approachable tone.

Part of setting the right tone means avoiding the use of unnecessary jargon.

Unfortunately, jargon is difficult to avoid when you are writing about the law. And the two major changes we are going to highlight in this article are both heavy on mumbo jumbo.

In its abbreviated version, one of the bits of terminology sounds like the noise a bird might make – or like a sub-atomic particle.

The two significant developments for Scottish personal injury claims which we are going to discuss are:

• The introduction of qualified one-way costs shifting (QOCS – pronounced “quawks”), and
• The introduction of damages-based agreements (DBAs)

How did we get to this point of change?

Though the origins of these changes can be traced back to 2009, it is from Sheriff Principal Taylor’s Review of Expenses and Funding of Civil Litigation in Scotland in 2013 that a clear line can be drawn to the present.

He reviewed statistics for numbers and types of personal injury claims made across the UK.

He found that numbers of claims in Scotland were much lower than you would expect if using the figures for the rest of Great Britain as your guide. He concluded that, even if a “compensation culture‟ had taken hold in England and Wales (which is a contentious question, anyway), the data for Scotland did not disclose evidence of its appearance here.

Taylor noted one of the main concerns for potential litigants was what the cost would be to them should they lose their court action.

The opponent in just about all personal injury actions is in fact an insurance company. According to the Taylor Review: “In many cases there is a true David and Goliath relationship.”

Under the current “expenses follow success” model, if the claimant lost their court action, not only would the claimant have to pay their own legal costs but also those of their opponents. This risk could be insured against – “After the Event” (ATE) insurance against an award of expenses in a personal injury action was available to clients of some solicitors at reasonable cost – but not always affordably.

The changes to which we are referring below will come about as a result of the Scottish Parliament passing the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill on 01 May 2018.

The plan is that it will create a more accessible, affordable and equitable civil justice system.

The Scottish Parliament’s stated intention is to commence a phased implementation of the Bill from Summer 2018.

What exactly are the changes?

1. Qualified one-way costs shifting (QOCS)

Under QOCS, the basic concept is that the claimant will not be required to pay the opponent’s costs if the claim fails, but the opponent must still pay the claimant’s costs in the usual way, if the claim succeeds.

This was a substantial part of the solution recommended by the Taylor Review, to address the concerns about an adverse award of expenses. In the personal injury litigation of the future, qualified one way costs shifting will mean that an unsuccessful pursuer will not be liable for the expenses of the defender apart from in exceptional circumstances.

QOCS will affect all defenders, not just those with the benefit of insurance.

What are these “exceptional circumstances” where QOCS will not apply?

These include situations where the claimant or the claimant’s legal representative:

• has acted fraudulently, or makes fraudulent representation;
• behaves in a manner which is manifestly unreasonable; or
• otherwise conducts the proceedings in a manner that the court considers amounts to an abuse of process.

The view of the Taylor Review was that few claimants need be concerned about exceptional circumstances such as these. Under QOCS, a claimant whose claim is unsuccessful will almost never be liable for the opponent’s costs.

2. Damages-based agreements (DBAs)

Under the new legislation, for the first time, solicitors, advocates and claims management companies in Scotland will be able to enter into enforceable agreements (DBAs) with their clients to take a share of any damages awarded.

This means that claimants will not be charged a fee if their claim fails, but the representative will retain a percentage of the damages (compensation) if the claim succeeds. DBAs are viewed as a way of funding litigation.

How much of a change is this?

In fact, it’s not much of a change, in practice.

The problem was that Scottish solicitors were prohibited from entering into agreements in terms of which they were entitled to a percentage of the damages awarded to their client.

However, operating under a different name and mechanism, DBAs have existed in Scotland for many years, mainly through claims-funding products linked to claimant solicitor firms.

The Taylor Review referred to the “faintly ridiculous situation” which existed as at 2013, whereby solicitors formed separate claims management companies and then referred work to themselves in order to get round the “percentage of damages” prohibition.

That will no longer be necessary.

Some of the finer details of the system will only be clarified via secondary legislation in due course.

This will include possible caps on amounts to be paid from damages via DBAs and rules about the interaction between QOCS and judicial tenders.

As recommended by the Taylor Review, to provide protection to the public, there will probably be a cap on the percentage of the award of damages which the legal adviser can take – probably on a sliding scale in which the percentage reduces as the award increases.

Tenders are formal court settlement offers by defenders (in England and Wales, they are called Part 36 Offers). The way the present system of tenders works is complicated. It’s the subject of an article on our Moray Claims website.

If the new system follows the recommendations of the Taylor Review, even if the pursuer fails to beat a tender lodged by the defender (in which circumstances the pursuer would ordinarily be liable for at least some of the defender’s expenses), the pursuer will still have some protection. Any adverse award of expenses will be restricted to a maximum of 75% of the damages awarded to the pursuer by the court.

How we can help

In this article, we have tried to demystify some of the jargon surrounding these two major changes for personal injury litigation, stemming from new Scottish Parliament legislation.

If you have any questions arising from this article or about any aspect of our personal injury claims services generally, feel free to speak up and contact us.

All initial enquiries are free of charge and without obligation. You can contact either of our accredited specialist personal injury solicitors – Marie and Peter – by phoning 01343 544077 or by sending us a Free Online Enquiry.

Image credit: Nicky Mack.