Style Success Fee Agreement Guidance

This guidance will come into effect from 1 May 2022

Purpose

This guidance has been produced to promote and encourage Scottish solicitors to use the Society’s Style Success Fee Agreement (SSFA) and to highlight the solicitors’ responsibilities when doing so. The guidance is set out in three parts. Part 1 provides general guidance and information on the use of the SSFA and provides background information for context. Part 2 is focused on providing guidance and information on the main clauses of the SSFA and Part 3 relates to Qualified One-way Cost Shifting, often referred to as ‘QOCS’

The guidance highlights factors the solicitor must consider when advising the client and those that must be drawn to the client’s attention to ensure that the client is fully informed and understands the nature of the agreement which they are entering into, the associated risks and the obligations of both the solicitor and client.

Status of this Guidance

Guidance does not have the same status as a rule, and it is not compulsory to follow guidance. The purpose of guidance is to assist solicitors to meet the standards of good professional and ethical practice. However, whilst not a Practice Rule, all solicitors are encouraged to follow the guidance as a matter of good practice. In the event of a complaint being raised which relates to the SSFA or this related guidance, a solicitor would have to provide a good reason for not following it. Click here to view the Society’ status of guidance.

It should also be noted that nothing in this guidance removes the responsibility of the solicitor to provide in writing the information required in Practice Rule B4 (Client Communication) when tendering for business or at the earliest opportunity upon receiving instructions to undertake any work on behalf of a client or the responsibility of the firm of solicitors to ensure compliance with the Practice Rules.

Part 1 Using the Style Success Fee Agreement 

Background to Success Fee Agreements (SFAs)

In 2011 the Scottish Government invited Sheriff Principal James Taylor to lead the Review of Expenses and Funding of Civil Litigation in Scotland. The remit of this review included consideration of issues in relation to the affordability of litigation. This included different models of funding litigation, such as contingency, speculative, and conditional fees, and insurance both before the event and after the event. This was in recognition that many individuals are significantly and economically disadvantaged in being able to afford legal costs associated with civil litigation and were therefore dissuaded from bringing, what otherwise would be, a legitimate claim.

In 2013, Sheriff Principal Taylor published his report; Review of Expenses and Funding of Civil Litigation in Scotland. The report set out clear findings and recommendations to address the challenges faced by economically-disadvantaged individuals in being able to afford the costs associated with civil litigation. These recommendations included the introduction of speculative fee agreements.

As part of their 'Making Justice Work' strategy, the Scottish Government took forward the findings and recommendations of Sheriff Principal Taylor’s in subsequent legislative reform. This was on the basis that the introduction of speculative fee agreements (or success fees) is likely to increase access to justice. In particular ‘… it is likely to increase access to justice for the “excluded middle”, i.e., those who neither qualify for legal aid nor have the means to fund a litigation privately’.

Following on from the Taylor report, and the Scottish Government’s commitment to adopt many of the recommendations of the review, The Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 saw the introduction of ‘success fees’. Section 1 of the 2018 Act defines a success fee as an agreement between the provider (i.e. the solicitor) and the recipient (i.e. the client) to pay a fee on the part of the recipient to the provider in the event of a successful litigation claim. But no fee, or a reduced fee, is to be paid by the recipient to the provider in the event of an unsuccessful litigation claim.

Following concerns regarding potential detriment to clients who may unwittingly agree to forgo a significant proportion of their awarded on-going care expenses allocated to pay for the costs associated with the personal injury claim, the Scottish Government further introduced the 2020 Regulations to provide a greater level of protection for clients who were contemplating entering into a success fee agreement with the solicitor provider.

The Civil Litigation (Expenses and Group Proceedings) (Scotland) Act (Success Fee Agreements) Regulations 2020 (the 2020 Regulations) came into force on the 27 April 2020. The 2020 Regulations seek to provide clarity on the amount a client can be asked to pay their solicitor in such agreements and puts a cap on the level of the success fee that a solicitor can recover from the client’s damages. The regulations provide consumer protection in terms of form and content of what a success fee agreement between the solicitor (the provider) and client (the recipient) must include for it to be valid.

The Society’s Style Success Fee Agreement (SSFA)

To support the Scottish solicitor profession in complying with both the 2018 Act and the 2020 Regulations, the Civil Justice Committee, through the Law Society of Scotland Success Fee Agreement Working party, and its Regulatory Committee, has designed a template Style Success Fee Agreement (SSFA) that may be used in personal injury cases together with a style Cooling off Notice. Both the SSFA and the accompanying Cooling off Notice have the status of guidance, which is not mandatory, but a solicitor will have to show good reason for departing from it.

The SSFA has been published (in April 2020) by the Society to assist solicitors who can choose to adopt the SSFA in its entirety, to make such amendments to this as necessary to reflect circumstances of the matter or it can be adapted for use in other areas of law. (Note: A damages based SFA must not be used in matters connected with family law proceedings)

The ‘Provider’ and the ‘Recipient’

Within the SSFA the solicitor or firm of solicitors providing the service is defined as the ‘Provider’. The client (or where appropriate, the client's attorney, executor or other formally appointed party representing the client's interests) is defined as the ‘Recipient’. For ease of reference, the terms of ‘solicitor’ and ‘client’ are used in this guidance.

Using the SSFA

The SSFA has been drafted to reflect the statutory requirements of the 2018 Act and the 2020 Regulations and is specifically designed for claims relating to damages resulting from personal injury or death of a person from personal injuries. Where a solicitor wishes to use the SSFA for any matter other than personal injury, they must modify the agreement to suit the particular matter. See section below (Modifying the SSFA)

It is not mandatory for solicitors to use the SSFA. However, solicitors are encouraged to do so as a matter of good practice whenever the solicitor and client agree on a speculative fee or damages-based agreement that falls within the provisions of the 2018 Act.

The provisions of the 2020 Regulations expressly exclude a damages-based success fee agreement being used in connection with family law proceedings.

Modifying the SSFA

The solicitor may modify the SSFA to reflect the client instructions, the arrangement agreed between the solicitor and client or to reflect the circumstances of the matter. The SSFA may also be adapted for other types of case, such as commercial or employment matters.

However, where a solicitor wishes to modify or in any other way make changes to the SSFA then the solicitor must ensure that any modifications or changes comply with the provisions of the 2020 Regulations and the 2018 Act.

The solicitor should be aware that where a modified SSFA is to be used then this must comply with section 7 of the 2018 Act. The agreement will be unenforceable to the extent that it makes provision which is materially contrary to section 7(1) or 7(2) of the 2018 Act or the 2020 Regulations (see further below).

Where the SSFA is to be used, modified or otherwise, then the solicitor should advise the client that this has been drafted in accordance with the provisions of the 2020 Regulations and the 2018 Act.

Where the agreement is contrary to section 7 of the 2018 Act then the client may have grounds for a complaint and the solicitor will be unable to recover expenses relating to those parts of the agreement which are unenforceable.

Complaints relating to an unenforceable SFA

Where an SFA is contrary to either or both the provisions of the 2020 Regulations and the 2018 Act, and is therefore unenforceable in whole or part, then this may be grounds for a complaint of unsatisfactory professional conduct, professional misconduct, or an inadequate professional services complaint against the solicitor. Should such a complaint be made and admitted by the SLCC it will be investigated by the relevant body (either the Law Society of Scotland or the Scottish Legal Complaints Commission).

In this situation, the solicitor will need to explain and justify why the omission of the provision set out in the Act or Regulations was made.

The solicitor is also reminded of the requirement to provide a letter of engagement to the client which must include advising the client of how to make a complaint. See Practice Rule B4 (Client Communication) and below at ‘Clause 9’.

Other documents to be provided with the SSFA

The solicitor must provide the client, along with a copy of the SSFA, a copy of the ‘Cooling off Notice’. The Society has published a style Cooling off Notice which reflects the requirements of The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. The style Cooling off Notice has the status of guidance.

To comply with the 2013 Regulations the Cooling off Notice must provide the client with the right to cancel the agreement within a minimum period of 14 days and the solicitor must explain this to the client.

The Cooling off Notice must state the date when the cooling off period will commence and the date when the minimum 14-day period will expire. The solicitor and client may agree on a longer cooling off period beyond 14 Days.

The solicitor should also ensure that they provide to the client the information required under Practice Rule B4 (Client Communication)

Future care loss and the Cooling off Notice

The Cooling off Notice should alert the client to the fact that by entering into an SFA, the client is agreeing to any compensation which they may obtain from the other side (including any possible future care loss) being reduced in order to pay the success fee and that it is open to them to seek independent advice on the SFA from an independent solicitor (at their own (clients) expense) as to the terms of the SFA.

Part 2   Content of the Style Success Fee Agreement

Introduction

Part 2 of this guidance provides guidance and information on each of the specific clauses contained within the Society’s SSFA and highlights important factors the solicitor should take into account when advising the client and what should be drawn to the client’s attention.

The Society's SSFA and related Cooling off Notice can be accessed via the Society’s website.

Clause 1: work to be included

Clause 1 requires all details of the client’s personal injury claim to be clearly stated within the SSFA. This should include work associated with the claim, that to be covered by the SSFA and the remedy sought by the client. The remedy sought must be because of personal injury or relating to the death of a person from personal injuries.

Clause 2: the client’s obligations

Clause 2 sets out the client’s obligations which are required to ensure that full co-operation is given to the solicitor by the client. These obligations will help and support the solicitor to do their work properly and ensure that they act in the best interests of the of the client in pursuance of the claim.

The solicitor should explain to the client their (the clients) obligations and the potential consequences should the client fail meet those obligations.

In terms of the SSFA, clients;

a) are expected to give instructions to the solicitor without undue delay. These should be detailed enough to enable the solicitor to do their work adequately. The instructions should be neither improper in terms of professional ethics nor unreasonable. The test for what is unethical or unreasonable is an objective one. It does not depend on the subjective perceptions of the solicitor and solicitors should be alert that the client may be particularly anxious in relation to instructing the claim.

b) are required not to deliberately mislead the solicitor on a material issue. Again, the test as to what is misleading is objective – what the reasonable solicitor would find materially misleading.

c) are expected to co-operate with their solicitor when asked, unless there is a reasonable excuse for not doing so. The request from the solicitor for information or action on the part of the client must be objectively reasonable in all the circumstances of the case.

d) should endeavour to go to any medical or expert examination when asked to do so by the solicitor or the other side’s lawyers, unless there is a reasonable excuse for not doing so. Any request to attend such examinations must be given with reasonable warning and deal appropriately with any travel expenses which the request will entail.

e) should accept the solicitor’s professional advice that, given the circumstances, the claim is unlikely to be successful or should accept the solicitor’s professional advice about reaching a settlement with the other side. The client will only be in breach of these obligations if the advice was given in good faith by the solicitor and in conformity with the professional obligations of the solicitor including acting objectively in the best interest of the client and not allowing the solicitor’s interests to come into conflict with those of the client.

Clause 3: the solicitor’s obligations

Clause 3 sets out the solicitor’s obligations. The solicitor is expected to ensure that their (the solicitor’s) obligations are fulfilled. The solicitor should explain their obligations to the client, in particular highlighting and explaining to the client the calculation of the success fee which will be payable.

a. The solicitor is expected to act in accordance with the professional standards of the solicitor profession and observe the Law Society of Scotland Practice Rules whilst reasonably (what the reasonable solicitor would do) undertaking all the necessary legal work, using their best endeavours to achieve the best outcome for their client.

b. The solicitor must consult with and advise the client, keeping the client updated of developments throughout the course of the claim. This includes, but is not limited to, developments such as advising the client and discussing any offers of settlement or advising the client on anything coming to the solicitor’s attention that may impact on the client’s chances of success.

c. Where the client is unsuccessful, the solicitor agrees not to charge the client any fees or expenses incurred by the solicitor whilst acting on the client’s behalf. This is conditional on the client meeting all their obligations under Clause 2.

d. Where the client is successful, and they recover damages from the other side, then the solicitor will be entitled to retain any award of expenses contained in the settlement or awarded by the court as well as the agreed success fee. The client shall only be liable for the payment of the premium for any ‘After the Event Legal Expenses Insurance’ and the success fee as agreed within the SFA.

e. The solicitor should explain fully to the client the options available to the client for paying the costs associated with bringing the claim. This should include, but is not limited to, the availability of legal aid, legal expenses insurance, speculative fees, written fee charging agreement, or success fee agreement. The solicitor should also fully and clearly explain to the client the potential cost implications should the clients action be unsuccessful. This should include discussion and advising on Qualified One-way Cost Shifting (QOCS) and After the Event Insurance. (See further below on QOCS).

The success fee payable by the client in the event of a successful claim must be set out as a percentage (%) within the SFA as measured against monetary thresholds. These reflect those set out within the 2020 Regulations. These are the maximum caps, and the solicitor and client are free to agree upon a different percentage cap providing this does not exceed the statutory maximum. The cap agreed, for example, could reflect the risk being taken by the solicitor.

The success fee payable to the solicitor only becomes payable after the client has obtained a financial benefit (or the solicitor has received this on the client’s behalf) as a direct or indirect result of the work of the solicitor on the client’s behalf. Both the 2018 Act and the 2020 Regulations are clear that the maximum success fee is inclusive of VAT and unrecovered outlays or expenses.

Clause 4: where there is an expected future loss of more than £1m

Clause 4 of the SSFA only applies in situations where there is a possibility that the future loss for the client will be more than £1m. This clause, which reflects concerns raised within the Taylor report, seeks to address, and recognise the possibility that the success fee could be levied against damages for the client which relate to the client’s future medical and care expenses. This would have the effect of reducing the funds available to pay the future medical and social care bills of a client who may have ongoing medical care needs because of the personal injury. In recognising the concerns, this clause seeks to allow success fees against all heads of damages providing certain conditions, drafted to be safeguards, are met.

To avoid the potential issue of a conflict arising regarding the solicitor’s and the client’s interest in receiving periodical payments for future care loss, the 2018 Act states that in any case where the future care loss is more than £1m the solicitor must either:

a) Where the damages are awarded by a court, obtain that court’s approval that it is in the best interests of the client to receive all or part of the damages as a lump sum; or
b) Where the damages are agreed between the parties in a settlement, a report from an independent actuary certifying that it is in the best interests of the client that the damages, including those for future loss, should be paid wholly or in part by way of a lump sum rather than annual or periodic payments.

(Note: The Cooling off Notice must also alert the client to the fact that by entering into a SFA the client is agreeing to any compensation which they may obtain from the other side (including any possible future care loss ) being reduced in order to pay the success fee and that it is open to them to seek independent advice on the SFA from an independent solicitor (at their own (client’s) expense) as to the terms of the SFA.

The Society maintains a list of specialist personal injury solicitors who might be appropriate sources for the client to seek independent advice via Find a Solicitor

Clause 5: ending of the agreement

Clause 5 sets out the circumstances whereby the client or the solicitor may end the SFA and the fees that will become payable should the agreement be ended before the conclusion of the claim.

The solicitor must explain to the client the right of the client to end the agreement at any time and explain the implications of this. In particular, the fees and outlays that would be due from the client, payable to the solicitor, should the client decide to cancel and end the agreement or should the client go on to instruct a new solicitor in relation to the same claim.

a) Cancellation, ending the agreement, by the client

During the ‘cooling off’ (Cancellation) period. The client must be given a cooling off period, which will be set out within the Cooling off Notice. If the client ends (cancels) the agreement in writing and within 14 days of the day they were sent or handed the “Cooling off Notice” by the solicitor (the cancellation period) then no fee or expenses / outlays will be payable by the client to the solicitor in terms of the SSFA, unless the client has instructed work to be done on the case during the cancellation period.

After the ‘Cooling off’ period has expired. In order to prevent clients using their freedom to cancel the agreement without reason to take advantage of the solicitor (for example by changing to a new solicitor who is willing to work for a lower fee when a settlement is reaching conclusion) the SSFA and the 2020 Regulations state that if a client ends an SFA before the case comes to an end or the solicitor has received their entitled fees and outlays from the other side, then the solicitor may charge for all the work done on the client’s behalf to date. This will be charged at the hourly rates as set out in the SFA and including VAT and outlays.

It is possible that such charges may exceed any success fee that is provided for in the contract, however these charges would have to be fair and reasonable in the circumstances and therefore could be taken (for a fee payable) to an independent auditor for checking or “taxation”.

The SFA must set out the hourly rates which will be payable, at the discretion of the solicitor, by the client to the solicitor should the client choose to end the agreement before the claim has concluded.

b) Cancellation, ending the agreement, by the solicitor

There are limited circumstances under which the solicitor may end the agreement.

Under Clause 2, (see above) the client has obligations to fulfil. Where the client does not fulfil some or all these obligations, the solicitor may choose to end the agreement. Whether these obligations have been met by the client is an objective test, namely whether the reasonable person would consider that the obligations have been met by the client.

Where the client has not met their obligations under Clause 2, and the solicitor chooses to end the agreement, the solicitor has the right, in terms of the SSFA to decide if the client must pay fees, VAT and any outlays incurred for the work done on their behalf up to that date. The amount the solicitor is permitted to charge for the work done to date cannot exceed the hourly rates as set out within the SFA.

In addition, the solicitor may exercise a lien or security over all documents and files relating to the client’s case pending full payment of the fees, VAT and outlays due from the client. However, the lien should not be exercised by the solicitor in a way that would significantly prejudice the client. The solicitor may also choose to end the agreement where they believe, acting objectively and in good faith, that the client is unlikely to succeed in their claim and having given the client this advice, the client then rejects this.

In these circumstances, the client having objectively met all their obligations under Clause 2, will only be responsible to the solicitor for payment of any expenses recovered from the other side. The expenses must relate to work done by the solicitor during the period up to the date the success fee agreement is ended.

Where the client rejects the solicitor’s advice

If the client rejects the advice given by the solicitor, which has been arrived at objectively and in good faith by the solicitor, to reach a settlement and the client then proceeds (either representing themselves or instructing a new solicitor) to receive a financial benefit, then the solicitor is entitled, under clause 5 of the SFA to charge:

• For the fees, VAT and outlays which have been incurred on the client’s behalf up to the date the success fee agreement is terminated. However, the amounts payable by the client to the solicitor in this situation are restricted to the expenses actually recovered from the opponent(s) and
• A success fee. The amount of the success fee payable in these circumstances is calculated by reference to the financial benefit actually obtained by the client but may not exceed the level of the success fee which would have been chargeable if the solicitor’s advice had been accepted by the client.

The success fee becomes payable by the client to the solicitor as soon as the financial benefit is obtained, whether because of extra judicial agreement or judicial determination.

The 2020 Regulations state that where a client has instructed more than one solicitor in the claim, whether under one or more success fee agreements, the maximum cap on the success fee(s) applies to the total amount payable by the client to those solicitors. Therefore, however many success fees the client enters into in the same claim, the total success fees payable is subject to the same maximum sum as though there was only one success fee.

In addition, the solicitor may only be entitled to a share of expenses, if the client, having pursued the claim, then goes on to derive a financial benefit.

What this means is that if the solicitor ends the agreement because the client has rejected the advice as to the likely success of the claim, and the client instructs another solicitor on the same claim, then should the claim succeed, the first instructed solicitor will be entitled to a share of expenses (including VAT and outlays) recovered by second instructed solicitor.

If the client wishes to change solicitor (thereby ending the agreement)

The solicitor must explain to the client the right of the client to end the agreement at any time and also explain the implications of this. Solicitors should draw the client’s attention to:

• the right of the solicitor to charge for the work done and recover outlays incurred up to the time the client has ended the agreement, and
• should the client end the agreement with the solicitor and instruct another solicitor, or choose to represent themselves, then the right of the first solicitor to charge for the work done and the outlays incurred to date, plus payment of the success fee that would have been otherwise payable had the client not ended the agreement (see Clause 5 of the SSFA).

The obligations of the client where a new solicitor is instructed

The client, under the terms of the SSFA, is expected to inform the original first-instructed solicitor of the identity of any newly appointed solicitor who has been appointed in relation to the same claim. The client must also instruct the new solicitor to account (pay) to the first solicitor any sums due under Clause 5 the SSFA.

Dispute between solicitors on the sharing the expenses

Where there is a dispute between the newly instructed solicitor and the original first solicitor regarding the proportion of expenses to be shared, the SSFA provides that any dispute will be referred, at the solicitor’s expense, to the Auditor at Edinburgh Sheriff Court. The Auditor will consider the services and work done by each solicitor and determine an equitable apportionment.

If the client chooses to represent themselves

If the claim is successful, then the client agrees to pay to the solicitor the same amount as would be due and on the same basis as if the client had instructed a new solicitor (see Clause 5 of the SSFA)

Clause 6: where there is a conflict between the SSFA and the solicitor’s standard terms of business

Clause 6 of the SSFA states that in the event of a conflict between the solicitor’s standard terms of business and the terms of the SSFA, then terms of the SSFA take precedence.

Clause 8: when the solicitor may be liable to pay the expenses awarded against the client

Clause 8 sets out the solicitor’s liability for court awarded expenses. This reflects the 2020 Regulations which provide that if a Court makes an award of expenses against the client specifically stating that the award is because of the conduct of the solicitor which amounts to:

a) the solicitor making a fraudulent representation or otherwise acting fraudulently in connection with the claim or proceedings or

b) the solicitor behaving in a manner which is manifestly unreasonable in the claim or proceedings or

c) the solicitor conducting the proceedings in a manner which is tantamount to an abuse of process,

then, in these circumstances, the solicitor (and not the client) shall be liable to pay the expenses awarded by the Court for that conduct.

Clause 9: where the client wishes to make a complaint

Clause 9 of the SSFA sets out the complaints process should a client wish to raise concerns or make a complaint.

In addition, solicitors must within the Terms of Business letter, and in accordance with Practice Rule B4 (Client Communications) inform the client that there is a person in the firm who deals with concerns and complaints (the Client Relations Manager). In the event of the client being dissatisfied with the conduct of the claim or any aspect of the solicitor’s services, the client may raise their concerns by writing to the firm’s Client Relations Manager.

Firms are also required to have a written procedure for dealing with complaints. This must be provided to a client upon request. It is good practice to highlight to clients where it can be found, for example on the firm’s website if it has one.

In addition to advising clients about the existence of the Client Relations Manager in the firm, the terms of business letter must signpost clients to the Scottish Legal Complaints Commission (SLCC), if they remain dissatisfied with how their complaint has been dealt with by the firm.

The letter must set out contact details for the SLCC, including the telephone number, postal address, and email address. A link to the SLCC’s website which contains information about how to make a complaint, including an online complaint form would also be helpful.

Further information on how to make a complaint can be found on the Scottish Legal Complaints Commission website

Part 3   Qualified One-way Cost Shifting

Introduction

Part 3 provides information and guidance on Qualified One-way Cost Shifting, more generally referred to as QOCS, explaining the background and most importantly the exceptions where QOCS will not apply and the solicitors’ responsibilities to provide the client carefully and fully with information and advice on QOCS, in addition to other cost and funding considerations.

Background and principle of QOCS

The general principle in civil litigation is that expenses follow success. Therefore, if a pursuer brings a claim and is unsuccessful, they will usually have to pay, not only their own legal expenses in bringing that claim, but also those of the successful defender. Given the uncertainties often associated with personal injury litigation, the threat of having to meet two lots of legal expenses could deter risk averse litigants from pursuing their compensation claims, especially if they were physically injured or vulnerable.

In the past, legal aid has often provided a protection or mitigation of this risk to pursuers who were eligible for it. With the decline of providers willing to act for clients in personal injury actions (clinical negligence cases in particular) on a legal aid basis, and the cost of “after the event” insurance premiums rising substantially, affording personal injury litigation has become a more pressing problem in Scotland in recent times. Speculative fees with an uplift were a partial answer, but they did not protect against having to pay the other side’s legal expenses if the pursuer lost the case.

The Taylor report accordingly brought forward a recommendation for the introduction of Qualified One-way Cost Shifting. This was taken forward by the Scottish Government in section 8 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 .

Section 8 of the 2018 Act provides that, where a person brings a claim for personal injuries, or a death resulting from personal injuries, and has conducted the proceedings in an ‘appropriate manner’, the court must not make an award of expenses against the person in respect of any expenses relating to the claim.

The principle of QOCS is that the losing pursuer will not be liable to pay the costs of the successful defender providing that the pursuer ‘conducts the proceedings in an appropriate manner’

QOCS only applies in relation to a claim for damages for personal injuries, or the death of a person from personal injuries.

Section 8 and the rules applicable to QOCS applies to all personal injury claims raised on or after 30 June 2021.

Explaining and advising the client on QOCS and other cost implications

The solicitor should explain fully to the client the options available to the client for paying the costs associated with bringing the claim, including potential liability for the other side’s costs. This could include, but is not limited to, the availability of legal aid, legal expenses insurance, speculative fees, written fee charging agreement, or the Society’s SFA.

If the claim cannot be resolved by negotiation, and the solicitor recommends that court proceedings should be raised the solicitor should at that point explain and advise the client in greater detail on the potential cost implications should the client’s action be unsuccessful. The advice should include informing the client about Qualified One way Cost Shifting (QOCS), highlighting to the client the statutory exceptions where QOCS will not apply and the extent of any claim for expenses that may be made by the defender.

Exceptions to the rule under the 2018 Act

Section 8(4) of the 2018 Act provides for three exceptions to the rule where the pursuer may not benefit from the costs protection which QOCS affords and would therefore be liable for the defender’s expenses. This will be the case where the pursuer or the pursuer’s legal representative;

a. makes a fraudulent representation or otherwise acts fraudulently in connection with the claim or proceedings,
b. behaves in a manner which is manifestly unreasonable in connection with the claim or proceedings, or
c. otherwise, conducts the proceedings in a manner that the court considers amounts to an abuse of process’

Further exceptions under the Rules of Sederunt

In addition to the exceptions provided under the 2018 Act, Rules made under the Act of Sederunt and which came into force on the 30 June 2021, specify further exceptions, and establishes court procedure for assessing whether the exceptions shall apply.

The further exceptions provided within the Rules of Sederunt are;

1. failure by the pursuer to obtain an award of damages greater than the sum offered by way of a tender lodged in process,

2. unreasonable delay on the part of the pursuer in accepting a sum offered by way of a tender lodged in process, and

3. abandonment of the action by the pursuer in terms of rule 21.1, or at common law.

In relation to these additional exceptions set out above, there is no requirement on the part of an opponent to establish that the proceedings have not been conducted in an appropriate manner.

Where a defender seeks an award to recover expenses, in the event of one of the ‘tender’ exceptions applying, then;

a) the pursuer’s liability is not to exceed the amount of expenses the applicant has incurred after the date of the tender,

b) the liability of the pursuer to the applicant, or applicants, who lodged the tender is to be limited to an aggregate sum, payable to all applicants (if more than one) of
75% of the amount of damages awarded to the pursuer, and that sum is to be calculated without offsetting against those expenses any expenses due to the pursuer by the applicant, or applicants, before the date of the tender.

More information on QOCS and what the Society has said on these can be accessed via: The Society Qualified One Way Costs Shifting Update