Ministers consult on "no win, no fee" agreement rules

Regulations covering "no win, no fee" agreements in civil litigation are the subject of a new consultation opened by the Scottish Government.

Ministers are planning detailed rules under part 1 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018, which will extend the use of success fee agreements – the term used to cover "no win, no fee" or "no win, lower fee" agreements.

Success fee agreements will be the main method of extending funding options to potential litigants. For personal injury claimants these will be simple to understand "no win, no fee" agreements. For the first time solicitors as well as claims management companies will be allowed to offer such agreements.

The new consultation includes the appropriate caps on success fees to make the costs of litigation more predictable. The Government seeks the views of service providers and prospective litigants as to whether the caps recommended in the Taylor report are equitable or whether different caps should be considered. The report proposed a percentages diminishing as the size of the award increases in personal injury cases, up to 35% in employment tribunal cases and up to 50% in commercial actions, all including VAT. Any outlays not recovered, including counsel's success fee, would be paid out of these deductions.

Part 2 seeks views on what types of proceedings are not suitable to be taken forward as DBAs. The bill as introduced excluded family proceedings from success fee agreements, but was amended by removing that exclusion and giving a power to ministers to decide what exclusions there should be. The consultation seeks responses on what types of agreements are used in family proceedings, and whether there are any other types of proceedings that are not appropriate for the use of success fee agreements.

Part 3 gives opportunity to comment on the form and content of success fee agreements. It is proposed that they must be probative, and set out the claim and the anticipated damages as well as the work covered by the agreement and how the fee will be calculated. Where there is more than one provider, only one fee will be payable, capped as if there were one provider. It will also set out the obligations of the provider, such as to progress the claim and keep the claimant informed, as well as complaints procedures and when the agreement may be terminated by each party.

Ministers do not think that legal aid and a success fee agreement should co-exist in the same case. Professional and regulatory bodies make it clear that it is not appropriate for providers of relevant services to apply for legal aid when a success fee agreement is in prospect.

Click here to access the consultation. The deadline for responses is 31 January 2019.