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CONSULTATION RESPONSES

VIEWS: 3 PAGES: 37

									CONSULTATION RESPONSES

              by


  SIMPSON AND MARWICK
         SOLICITORS


              to


Taylor Review of Expenses and
 Funding of Civil Litigation in
           Scotland


             2012

                                  1
CHAPTER 3: THE COST OF LITIGATION



2. Should solicitors’ fees for litigation be recovered as expenses on the basis
of time expended, value of the claim or some other basis


The system for recovery of costs should remain in its present form which is basically
that of time expended. It is perhaps of historical value to explain that a solicitor has
the option to prepare an account on the basis of the detailed Table of Fees or the
block scale Table of Fees in both the Court of Session and Sheriff Court. The block
scales are derived from the preparation of detailed accounts from the average run of
the mill case to the more complicated and labour intensive one resulting in an
average cost being arrived at for all aspects of the block fees thereby providing fair
and reasonable remuneration for the solicitor based on the factual element of work
undertaken by the solicitor. Block fees in the Court of Session and Sheriff Court are
used around 90% of the time. If the solicitor or the law accountant decides that a
greater recovery of costs can be made by the preparation of a detailed account then
that is an option for the successful party. It follows that any items of item of work
taxed off by the Auditor, in a detailed account, are normally considered to be agent
and client, client paying costs and not recoverable within the party/party account.
We are firmly of the view that the existing system has stood the test of time and
reflects an accurate and reasonable basis for the recovery of costs from the
unsuccessful party.



3. Is LPAC, as currently constituted, an appropriate body to review the level of
fees for litigation which may be recovered as expenses? If not, what
alternative body should carry out this function and what should be its
composition?


We suggest that LPAC is an appropriate body but that it should be extended by a) a
Sheriff who has some knowledge of costs and b) a law accountant who has
experience in the preparation of Judicial Accounts and attending at taxation in both
the Court of Session and Sheriff Court.



4. Is the test currently applied by the sheriff court in sanctioning the
instruction of counsel appropriate? If the sanction of the Court of Session
were to be required prior to the instruction of senior counsel, what test should
be applied?


                                                                                      2
      We see merit in making an application for the employment of
       Counsel/Solicitor Advocate prior to the instruction of Counsel/Solicitor
       Advocate. We would suggest that a party to the action should know by the
       adjustment stage whether they feel such sanction should be sought, with such
       an application being made at the Options Hearing. In that event then the
       Court could endorse the drafting of the Writ by Counsel/Solicitor Advocate on
       the assumption that such work has been done. In such circumstances we
       would recommend that any sanction sought should not be retrospective.

      We consider that the test to be applied should be one of reasonableness in
       regard to the sanctioning of Senior Counsel or a Senior Solicitor Advocate.
       We would however highlight that in many cases the employment of Senior
       Counsel does not merit the employment of Junior Counsel in addition,
       particularly with the instruction of Counsel by an experienced solicitor. For
       example we would suggest that in many cases where liability is admitted the
       use of one Counsel only is sufficient and that matter should be addressed by
       the Court at an early stage. The cost of Senior Counsel should only be
       recovered if sanction has been granted by the Court and the Court should
       also specify whether the charges of Junior should be recovered in addition.




5. What test should the court apply when considering a motion for certification
of an expert witness – should it be necessity, reasonableness or some other
test?


Reasonableness. We note that our existing system on the instruction/certification of
Expert Witnesses works fairly well and transparency does exist in that each party are
at least aware of the Experts involvement albeit not the amount of their charges.
However, we do consider that certification should only be granted if the reports have
been produced or lodged in process and are to be relied upon by a party.




6. In the sheriff court, should counsel's fees be a competent outlay in a judicial
account of expenses only from the date of an interlocutor certifying the case
as suitable for the employment of counsel?


Yes. However it is suggested that the Sheriff should be actively involved in what
work is covered by the employment of Counsel/Solicitor Advocate in line with
                                                                                   3
General Regulations 12, 12A and 12B....Act of Sederunt (Amendment) 2011 No. 403
which state:-

      “12. Where the court has sanctioned work in a cause as suitable for the
      employment of counsel, the Auditor is to allow—

      (a)where counsel is instructed, the reasonable fees of counsel for doing that
      work and the applicable fees for instructing counsel in Chapter II, Chapter III
      or Chapter IV of the Table of Fees; or

      (b)where a solicitor advocate is instructed, the reasonable fees of a solicitor
      advocate for doing that work and, where the solicitor advocate is appearing on
      the instructions of another solicitor rather than on his or her own, the
      applicable fees for instructing counsel in Chapter II, Chapter III or Chapter IV
      of the Table of Fees.

      12A.The Auditor may also allow fees of counsel or a solicitor advocate and of
      the instructing solicitor for consultations reasonably required in relation to the
      work for which sanction is granted, but except on cause shown, fees for only
      two consultations in the course of the cause are to be allowed.

      12B.Otherwise, no fees are to be allowed for the work of counsel and no
      special account is to be taken of the work of a solicitor advocate.”




7. In the Court of Session, should senior counsel's fees be a competent outlay
in a judicial account of expenses only from the date of an interlocutor
certifying the case as suitable for the employment of senior counsel?


Yes, with the proviso that it must fall to be a reasonable expense of process.




8. Should the presiding judicial office holder assess what would be a
reasonable fee for counsel in any account of expenses? If so, at what point in
the proceedings should that assessment be made?


Yes, with the proviso that it must fall to be a reasonable expense of process.
However, with a view to achieving consistency a Costs (or if preferred Expenses)
Judge should be appointed in the Court of Session and a Costs Sheriff should be
                                                                                      4
appointed in each Sheriffdom. Any determination regarding certification of skilled
witnesses, sanction for Counsel/Solicitor Advocate or the allowance of an additional
fee should be made by the Costs Judge/Sheriff, in the absence of agreement
between the parties.

To conduct the taxation process there should be a Costs Assessment Team headed
by the Auditor of the Court of Session assisted by a number of Costs Assessors.
This team should consist of Law Accountants, Solicitors and Judges appointed and
ranked in terms of experience. The Costs Assessment Team would conduct all Court
of Session and Sheriff Court taxations.

In order for the Costs Judge, Costs Sheriffs and the Costs Assessment Team to
make consistent decisions and assessments it is essential that training is provided
and ongoing. Responsibility for that training should be assumed by the Judicial
Studies Committee.




9. From when should the fees of an expert witness be a competent outlay in a
judicial account of expenses?


 The present system existing within both the Court of Session and the Sheriff Court
works reasonably well and would be best left alone. In addition it is noted that the
Auditors task is not solely to assess the remuneration but in terms of Court of
Session Rule 42.5 (2) (a) and (b) and Sheriff Court General Regulations 8 and 9 to
consider whether the Expert Report is a fair and reasonable charge in the
circumstances of the case. For example an Expert’s charges incurred following a
successful Tender would not be recoverable against the opponent and a party might
opt to amend his/her case in the light of an Expert Report which might be
unsuccessful or incurred through the solicitors own fault. In such circumstances the
Auditor might disallow such charges.




10. Should the presiding judicial office holder assess what would be a
reasonable fee for an expert witness in any account of expenses? If so, at
what point in the proceedings should that assessment be made?


Yes, always provided it forms an expense of process. In addition parties should
divulge the amount of the Experts charges for his/her Reports as the action
                                                                                   5
progresses and the Court should only intervene if one party considers that the cost
of an Expert´s Report is excessive. Reference is made to Response 8 hereof in that
the determination should be made by the Costs Judge or Costs Sheriff and the
assessment of the fee undertaken by the Costs Assessment Team.




11. Is it reasonable for counsel to be entitled to charge a commitment fee and,
if so, should that be prescribed or left to the discretion of the Auditor?


No. It is suggested that major concern exists in Scotland over fees payable to
Counsel by way of Commitment Fees. It is proposed that these should be
prescribed. If it were the case that Lord Carloway’s decision in Jarvie was followed
by all Auditors then that would not be unreasonable. So in effect for a case set down
for 4 days which settles late on Friday afternoon prior to the Tuesday, a 1 day
commitment fee only should be allowed and in similar circumstances a case set
down for 8 days, 2 days commitment fees. Suffice to say that his Lordship´s views
which we endorse are not followed.

It must be said that ALL commitment fees are met with a sense of suspicion by
clients in that considerable doubt exists as to whether a duplicated payment is being
paid. A solicitor for example is paid for the work actually undertaken and no
commitment fees have ever been paid to him/her. As a matter of policy and
transparency this firm does not charge any commitment fees on behalf of our
Solicitor Advocates either to our client or by way of recovery from a third party. We
do not consider that the introduction of Brief Fees in Scotland would be of benefit to
the profession. Why should Counsel not get paid on the basis of work fairly and
reasonably undertaken subject to taxation in the normal way?




12. Should the level of fees recoverable by the successful party in a
commercial action be greater than in other types of action and, if so, what is
the justification?


Yes in certain instances particularly in relation to “time engaged”. The justification
for such an increase would be mainly based on the necessity in Commercial actions
to have a “hands on” front loaded approach to this type of litigation taking into
consideration the time restraints that often apply and should also be subject to the
complexities of the case.
                                                                                    6
13. Should a tariff-based system for assessing the level of recoverability of
judicial expenses be introduced? If so, how might such a system be
structured?


1(a). We have carefully and exhaustively considered the whole question of the
percentage of costs recovered by a successful litigant in Court of Session actions.
Presently the successful party can choose whether to prepare their account using
the detailed table of fees or the block table of fees. They may also apply to the Court
for an additional fee. In addition, should they choose to use the block table then the
Auditor has the discretion to increase these fees, if the successful party can
demonstrate just cause. Given this range of options the gap in relation to recovery is
eliminated or at worst a small one. There is clearly enough flexibility within the table
of fees, as they are presently constructed, for the successful party to recover the
maximum amount of costs.

1(b). In relation to recovery of costs in the Sheriff Court we disagree with the
contention that a shortfall exists in regard to the recovery of costs from the
unsuccessful party. Put simply that is incorrect. Once again our investigation and
examples confirm our proposal that the Sheriff Court fees in Ordinary & Personal
Injury actions should remain as they are bearing in mind that a 10% increase in fees
has been made this year to the Personal Injury Part IIA of Chapter II table of fees.
We would add that such an increase results in solicitors being able to charge a time
rate of £174.20 per hour according to the block table.

1(c). In addition we are advised that a number of solicitors in the Sheriff Court have
expressed a view that they consider the block fees, particularly the Personal Injury
Tables to be generous. We would add that with the agreement of our own clients we
accept the fees recovered judicially in the Sheriff Court in lieu of any agent and client
fees. Our examples conclude that in 8 out of 10 cases we are better remunerated
by the use of the block fee table of fees than we are using agent and client, client
paying charges. We are happy to vouch this proposition if requested to.

1(d).

Proportionality/Predictability

At this juncture we must be clear on one issue which must surely be incorporated in
to a tariff-based system. This is Proportionality between the award of damages and
the amount of costs paid. This, with respect, is by far the most important question
that this consultation process must surely address.

                                                                                       7
In a study of 6502 cases in 2010 and 2011, a total of 2,175 or 34 percent of cases
were paid costs at a rate in excess of the damages awarded and in some case
substantially more. While we recognise the comments expressed in paragraph 1.4
(page 12) of the Consultation paper we would be burying our heads in the sand if
this most important area of costs is not fully addressed by the consultation process.
It is by far, in our opinion, the most crucial issue in relation to the matter of costs
arising today. What we are facing is an abuse of Scottish costs in low value claims
and this issue must be addressed with the greatest degree of urgency.

Proportionality leads to Predictability of costs. The Civil Procedure Rules in
England/Wales deal with cases in a way which is proportionate to the amount of
money involved, the importance of the case, the complexity of the issues and the
financial position of each party. In doing so the Court is able to ensure that the
parties are on an equal footing, the case is dealt with expeditiously and fairly and
that the case is allotted an appropriate share of the Courts resources.

Proportionality is long overdue in Scotland. It is supported by the Scottish
Parliament and most fee paying clients. We suggest a pilot scheme for all cases
involving road traffic accidents with damages recovered up to £15,000. Costs should
be capped with the fee element equating to a maximum of say 50% of the sum of the
damages.

VAT may be recovered in addition where appropriate. Disbursements should be
restricted in line with Part 45 of the Civil Procedure Rules for England and Wales
(Rule 45.10) which allows a claim for the following disbursements to be made but no
other type:-

      Medical records recovery fee (once per institution)

      A medical report

      A police report

      An engineers report

      A DVLA search

There will be no sanction for the use of Counsel/Solicitor Advocate and in addition
the Costs Judge/Sheriff should take proportionality into consideration in these cases
when dealing with requests for certification of skilled witnesses.




                                                                                     8
14. Should any table of fees provide for a more experienced solicitor to
recover at a higher rate than a newly qualified solicitor and/or for an accredited
specialist to recover at a higher rate than a solicitor without accreditation?


We consider that it would be equitable for an amendment to the table of fees to
reflect a higher rate for a more experienced solicitor and also one with specialised
accreditation, providing that additional skill can be demonstrated by the solicitor to
have been used in the case. This would not be satisfied if the case is in effect
delegated to counsel to deal with all but the procedural aspects as seems to
regularly occur currently, particularly in the Court of Session.




15. Is the ability to request an additional fee a reasonable procedure for
regulating the recoverability of judicial expenses?


Yes. Reference is made to answer 8 in that the application for an additional fee
should be determined by the Costs Judge/Sheriff.




16. If the concept of an additional fee is retained:
   a. at what stage in the proceedings should a motion for an additional fee
      be made?
   b. should motions for an additional fee, and the percentage increase, be
      determined by an auditor of court or by the member of the judiciary
      hearing the motion?


   a. The system presently administered is fair and reasonable and we submit that
   the existing system be retained i.e. applications for an additional fee being made
   on conclusion of the action. That said we can see nothing wrong with an
   application for an additional fee being made at anytime the matter of expenses
   are determined.

   b. While we accept that the Costs Sheriff needs guidance on additional fees we
   consider that it is of benefit to the profession that Costs Sheriffs decide the uplift
   to be applied as this provides greater transparency and consistency.


                                                                                       9
   In the Court of Session we accept that the Auditor has most experience in
   determining the uplift to be applied. However we question whether that is the
   best system available from a transparency view point. We would propose the
   following:



      where no evidence is led the Costs Judge should retain the right to determine
       whether a case merits an additional fee and remit to the Auditor in the normal
       way.

      the Auditor, prior to taxation, should fix a diet for parties so as he can be
       addressed on the uplift to be applied with a short written Report being issued
       by the Auditor providing reasons for his decision and the uplift (if any) to be
       applied in the event of taxation of the Account.

This would provide greater transparency for all parties and clients alike. It would
also allow the issue of an uplift to be argued by a solicitor or law accountant.




17. Should a litigant be entitled to claim interest on an award of judicial
expenses and, if so, from what date and at what rate?

We consider that all parties should be entitled to interest on an award of judicial
costs from the date of taxation on the proviso that interest would only be chargeable
if settlement of the taxed amount were not paid within a 28 day period. The rate to
be applied should be the same as the bank rate pertaining at any particular time.




CHAPTER 4: FURTHER ENHANCING THE PREDICTABILITY OF THE COSTS OF
LITIGATION



18 – Should the Court have the discretion to restrict recoverable expenses in a
Small Claim even in cases where a Defender, having stated a defence, has
decided not to proceed with it?



The absence of a compulsory Pre-Action Protocol being in force means that at the
point when a Small Claim (or indeed any type of action) has been raised, the
Defender may not have been provided with sufficient information to enable him to

                                                                                   10
properly consider his defence and if appropriate whether he should settle the case.
This situation may arise in the context of both liability and quantum disputes. If a
compulsory Pre-Action Protocol existed, placing certain obligations on the parties to
exchange information prior to raising proceedings, then it is hoped this would
increase the likelihood of a Defender being able to consider, at a much earlier stage,
whether he has a good defence to state to the Court.

Until the parties are bound by a compulsory Pre-Action Protocol, it is our view that
the Court should retain a discretion to restrict recoverable expenses in the Small
Claims, in cases where a Defender, having stated a defence, has decided not to
proceed with it, if the Court is satisfied with the explanation as to why the defence
had to be entered in the first place. The present system which allows the Pursuer
being entitled to recover expenses on the Summary Cause scale in every situation
where the Defender has entered a defence but subsequently withdrawn it, is unjust
and unfair in circumstances where the Defender may not have been provided with
the necessary information to enable him to assess his position by the time the
defence needs to be entered in Court.

We also see no reason why the Court’s discretion cannot be extended to allow for
Summary Cause expenses being awarded to either party, upon success, in the
event that that party can provide evidence that the work involved in pursuing or
defending the Small Claim up to the point of extra judicial settlement or indeed upon
conclusion of a Proof, merits a higher award of expenses than the present fixed rate
of £150 (or 10% of the value of the claim where it is greater than £1,500).




19 – Should more cases in Scotland come under the scope of a fixed expenses
regime? If so, what types of case should be included?



Again, until parties have to operate under a system of compulsory Pre-Action
Protocols in order to encourage early exchange of information prior to proceedings
being raised in Court, it is difficult to consider whether there is benefit in more cases
coming under the scope of a fixed expenses regime. In any event, it is arguable that
the existing table of fees for both Summary and Ordinary Cause cases (and indeed
the same argument applies in respect of cases raised in the Court of Session) can
already be viewed as fixed, to a certain extent, given that the block fee system goes
some way to addressing the question of predictability by setting fixed costs for
different cases at different procedural stages. However, we consider that there may
be some merit in considering capping expenses for certain cases, perhaps for
personal injury actions with a value up to £15,000. We are attracted to the argument

                                                                                      11
that for low value claims, proportionality can be addressed by capping the cost of
work involved in taking precognitions, the instruction of medical reports and other
expert witnesses etc. However, each case has to be determined on its own merits
and we recognise that there may be exceptional circumstances that would merit the
Court having discretion to waive any such capping restrictions where the work
carried out justifies additional expenses being awarded over and above any capped
rates.




20 – Should each party to a litigation in Scotland bear their own expenses? If
so, in what types of litigation? Should rule be qualified and, if so, in what
circumstances? In particular, is the general rule in family cases appropriate?



As a general rule, there should be no change to the status quo: that expenses follow
success, to be borne by the unsuccessful party. Perhaps the most important point to
be made is that we believe a system of non-recoverability is inherently unfair to both
sides. Our concern with any departure from that rule is that it may encourage
Pursuers to litigate without careful consideration as to whether there is any merit in
the case before raising proceedings.

We also anticipate that the converse to that argument is also likely: if Pursuers have
to bear their own expenses then they may be discouraged from pursuing their claim
if there is no certainty that expenses will follow success. We anticipate that this may
result in Pursuers’ agents being less encouraged to act speculatively and as a
consequence, this may increase the burden being placed on the Scottish Legal Aid
Board to fund civil actions. There is already a qualification to the status quo, in that it
is already possible for someone with the benefit of a Legal Aid Certificate, even if
they lose, to request the Court to modify any award of expenses against them,
usually to nil. The effect of this is that both parties bear their own expenses. In our
experience, this situation discourages Defenders in proceeding with a stateable
defence because at the end of the day, it is always known from the outset, (if a Legal
Aid Certificate is in process) that the Defenders will not recover their expenses
following success. This leads to settlements on grounds of economics rather than
on the merits of the claim.

We are also concerned that the non recoverability of costs may result in the
Pursuer’s expenses being funded out of damages which we consider to be an unjust
result. Alternatively, we may find ourselves faced with the situation developing, as
they presently have in the US, whereby awards of damages are increased to


                                                                                        12
compensate for the funding of legal expenses. We would refer you to our Response
at 44D.

The issue of parties bearing their own expenses in family actions is quite different.
However this is a subject which is very relevant given two recent conflicting
decisions in child relocation Proofs where expenses have been a live issue.

Indeed, one of the cases is due to come before the Inner House at the beginning of
2012 and the award of expenses in favour of one party is being challenged. It is felt
that in general terms, there is an uncertain approach to resolution of expenses in
family actions in the Sheriff Court and accordingly, it can be difficult to advise clients
on the likely outcome. Whilst the consultation paper discusses “the general rule in
family cases” being for each side to pay their own expenses, we have noticed a
move away from this in general years. Our view is that it is often now very difficult to
predict how a Sheriff or Judge will deal with such an application. As an example, we
have had recent involvement in a case whereby the mother was found liable in the
expenses from the point of suspension of her Legal Aid Certificate. In recent years,
we have been involved in a number of other Proofs that proceeded only on issues
relating to children and in each case, awards of expenses were made. Greater
judicial consistency regarding the award of any expenses in family actions is
required. In addition, there is an argument that the Legal Aid Board also require to
consider more robustly representations about unreasonable conduct on the part of
an assisted party.

Fundamentally, our experience suggests that the status quo, and the burden of
having to meet the opposing party’s expenses in the event of their success
encourages both parties to assess the merits of proceeding with litigation both at the
outset and during the course of the action as it proceeds to different stages in Court.




21 – Should a procedure for the Summary Assessment of Expenses be
introduced into the Civil Courts in Scotland?



As a generality, it is not felt that there would be much additional benefit achieved
from introducing a procedure for summary assessment of expenses. Our concern is
that this would prolong the litigation process resulting in an increased spend. Our
understanding of the present system in England is there are certain safeguards built
into the English cost procedure, like hourly rates, to account for the additional time
and expense of Summary Assessment. If introduced into Scotland, a whole scale
movement away from the existing practice of block fees would be required which we
anticipate would generate more problems than the introduction of Summary
                                                                                       13
Assessment would solve. In addition we understand that in England, before every
procedural hearing a summary of costs incurred has to be prepared which is an
onerous and time consuming task leading to agents having to print off all the time
incurred on file between two set dates and allocate it between different fee earners
and then between different tasks. Whilst this may work well in a system already set
up to deal with the costs of this additional work, we remain unconvinced that the time
by lawyers spent on this exercise would necessarily be serving the best interests of
the client.

In any event, we believe that the current system of assessing the full costs of
litigation, after the action has settled extra-judicially or concluded at Proof allows the
parties to properly assess their time and expense involved. It is believed that the
impact of an adverse award of costs at any stage in the proceedings generally deters
parties from proceeding with unnecessary motions or arguments at a particular stage
in proceedings and the same applies to raising proceedings in the first place whether
or not those costs are enforced at the time of the award. We also consider that there
are a number of advantages in having the whole question of cost assessment dealt
with by qualified Law Accountants, rather than having the matter argued at more
expense to clients, by lawyers in Court.

We agree that the present system for assessing expenses would benefit by being
updated. Our view is that there is an inconsistent approach by Sheriff Court Auditors
in particular. Accordingly, if there is a willingness for a brand new procedure to be
introduced to assess expenses (as we have recommended above), then perhaps
any such system should rest with an experienced team of Solicitors and Law
Accountants along with the appointment of Costs Judges in both the Sheriff Court
and Court of Session, as discussed at Response 8 above.

If summary assessment were to be introduced, we would be concerned about the
additional Judicial and Court time which would be taken up by this process.
However, there may be exceptions to this view in certain areas, particularly for
example, family disputes. There is perhaps a role for something akin to the summary
assessment procedure where there has been contempt for non-adherence to an
interlocutor for contact etc. However, in general terms, we remain of the view that
we are not in favour of summary assessment in family cases as we believe that the
existing arrangements whereby you can extract an expenses interlocutor and
proceed with enforcement whilst litigation continues should provide adequate
protection.

In non family cases it is often only at the conclusion of the case that a view can be
taken as to whether one side or other acted unreasonably in the conduct of the
litigation. In addition we often encounter “founding” letters being sent with settlement
proposals but even in those instances, there can still be issues as these are not the
equivalent of a judicial Tender. The complexities of the 1985 Act and the various

                                                                                       14
types of award which can be made – eg pension sharing, property transfers,
periodical allowance etc all make it unhelpful to be too rigid as regards expenses
issues in family cases.

We would also suggest that there may be merit in having pre-Taxation meetings
between the parties in relation to Accounts over a particular figure, for example
£100,000. We have in mind something along the lines of a Pre-Trial Meeting held
between the parties with a Minute to be signed so that there is a responsibility placed
on each party to make the meeting meaningful and to focus the parties’ minds to
reduce the amount of time spent arguing points at Taxation. It would be a
worthwhile exercise to establish how many Taxations in the Court of Session involve
“run of the mill” low value personal injury actions that should be capable of
adjustment by parties entering into meaningful negotiations. However, we consider
that this suggestion is closely tied in with the present system of fee fund dues and
the lack of ability for tendering an offer in relation to an Account of Expenses. This
should of course be introduced.




22 – If a procedure for Summary Assessment is introduced, in what
circumstances should the Summary Assessment of Expenses take place and
should it be restricted to any particular types of action?



As indicated at Response 21 above, we are generally not in favour of the
introduction of Summary Assessment of Expenses. However we can see that upon
application to the Court, there may be circumstances where the Court may make an
award and enforce an assessment of the award of costs and require a payment to be
made before the conclusion of the action in circumstances where financial hardship
can be shown by one party. There may also be an argument for summary
assessment upon application to the Court in a commercial action where much
needed cash flow is required by a commercial party for example. That said, in
relation to commercial actions there is nothing to stop any party enforcing an award
of costs granted during the course of any action eg following amendment
procedures, or even wasted preliminary hearings. To that extent whilst this practice
is not the direct equivalent of summary assessment of costs it is at least an award
that allows costs to be recovered if need be. A similar argument may apply to family
law disputes.




                                                                                    15
23 – Would there be any benefit in introducing a procedure of submitting
schedules of expenditure similar to the pilot scheme operated in the
Birmingham Mercantile Court and TCC?



No.

Our overriding concern would be that introducing a similar procedure to the pilot
scheme operating in the Birmingham Mercantile Court, for example, would be
introducing an overly burdensome and onerous, not to say laborious additional and
of itself expensive procedure into the litigation process. There is a real risk that this
would increase the overall legal spend to both parties involved in any litigation yet it
is unclear what substantial benefit either party would receive from a similar
procedure operating in the Scottish Courts. Whilst Lord Jackson’s response to the
pilot scheme operating in England is understandable: as the whole question of
predictability of costs in England is something that requires addressing, the same
level of unpredictability in the present Scottish regime is not apparent.

In our view, experienced litigation lawyers should be able, without difficulty, to advise
their clients on what the likely costs are going to be both at the outset of proceedings
being raised and throughout the course of those proceedings. Regular reviews and
advice given on what the overall cost of any action is something all of our lawyers
are trained and experienced in. We believe that as a generality, it is a relatively
straightforward exercise to accurately predict and recommend an appropriate
reserve for the expenses of the proceedings, as advised to our clients at the outset
of a case and throughout the duration of the litigation. There will obviously be
exceptions to that rule in the event that a particular case progresses in a manner that
could not have reasonably been anticipated at the outset by either party. However,
contingencies for that event should always be built in to any party’s assessment on
cost reserves as it falls within all lawyers professional obligations to consider the
merits and costs of every action on a case by case basis.




24 – Apart from imposing sanctions, what other powers, if any, should be
made available to the Court to promote predictability and certainty of judicial
expenses?



We consider that it should be open to any party to request the Court to order the
opposing party to confirm how they are funding their action. Obviously, in the event
that a litigant has the benefit of a Legal Aid Certificate, then that will be made known
                                                                                      16
to the defending party once the Legal Aid Certificate has been lodged in process.
However, it would provide greater security and comfort to a defending party to be
made aware, at the outset, how a Pursuer is funding an action whether including
BTE or ATE Insurance, a speculative funding arrangement with his or her agents or
whether that individual is funding the claim personally.

The introduction of the Chapter 36 and Chapter 42 rules in both the Sheriff Court and
Court of Session procedure have gone a long way to encouraging judicial case
management, to the benefit of both parties. Timetable dates for lodging List of
Witnesses and Productions and, the deadline for parties to discuss the case by way
of a telephone conference call or at a Pre-Trial Meeting allows parties to at least
predict a base level of costs which will be incurred by each of those stages as the
parties proceed through the litigation process to Proof. However, there are many
cases in which it is felt that greater predictability and in particular, proportionality
could be encouraged by the Court ordaining either party to lodge an earlier List of
Witnesses or Productions for example. In many instances, in the absence of there
being any compulsory Pre-Action Protocol, parties do not have the benefit of early
exchange of information until the last date for lodging productions in Court and it is
therefore difficult to predict whether a defence will continue to be relied upon and if
so, how much further investigation work is required in order to assess the merits of
proceeding to Proof. There is also an argument, particularly for the lower value
cases, that there is merit in the use of the instruction of joint reports, particularly for
low value quantum only cases. In certain circumstances we see no reason why a
Court cannot restrict the length of reports being instructed and restrict the length of
precognitions being taken from witnesses, as examples.

One particular matter of concern recently encountered is the increasing n umber of
precognitions of over 30 pages in length. These are taken from witnesses in
straightforward, low impact, low value whiplash type actions, occasionally during
consultations with counsel. They are charged on a per sheet basis in the Account of
Expenses. That type of example is impossible to predict at the outset when
Defenders are advising their clients on cost reserves. Similarly, in certain
circumstances, there may be merit in having parties ordained to attend a Pre-Trial
Meeting at a much earlier stage than the Court timetable provides for. Of course,
there is nothing in the rules at present to prevent parties from meeting earlier but it is
often the case that one party does not accept an invitation by the other to meet
earlier than the deadline provided for by the timetable. Similarly, for an application to
the Court, parties could be ordained to enter into Joint Minutes agreeing various
issues much earlier than waiting before the morning of the court for example. It is felt
that these measures may assist parties to predict the level of expenses, with a
higher degree of certainty, particularly for cases likely to run all the way to Proof.



                                                                                        17
CHAPTER 5: PROTECTIVE EXPENSIVE ORDERS



25 – Should the power to apply for a PEO in Scotland be limited to
environmental cases or should PEOs be available in all public interest cases?




This is not an area in which we have any detailed experience and therefore we do
not consider that it is appropriate for us to comment further.



26 – Should limits be set on the level at which a PEO is made or should this be
a matter for judicial discretion?




This is not an area in which we have any detailed experience and therefore we do
not consider that it is appropriate for us to comment further.




CHAPTER 6: REFERRAL FEES



27.    Should lawyers be permitted to pay a sum of money to a third party in
       return for referrals or instructions for other business?



No.

At present the restriction on solicitors paying referral fees is frequently disregarded.
As noted below the mechanism of paying a fee to become a member of a panel
erodes any value to the rule. Referral fees directly fuel cost inflation and the practice
is now discredited. Although it is accepted that numerous claims management
companies now base their trading model on payment of referral fees it is reasonable
to assume that absent the referral payment the savings made reduce pressure on
costs while still allowing the claimant community to advertise their services to the
                                                                                      18
public in other ways. In our opinion, the absence of referral fees need not decrease
the frequency of legitimate claims. We take the view that victims who have suffered
from compensable injury are not benefitted by referral fees which, ultimately, serves
only to increase the amount of money within the claims system noting, in particular,
that referrals have been reported as emanating from numerous sources including
repair garages and emergency services and not just insurance companies. Most
recently there seems to have been an acceptance that increased motor premiums
result, in part, from the quantity of claims, particularly whiplash, being pushed
through the system. Many of these claims are of doubtful quality, have a
disproportionate level of fraud, and serve only to increase pressure on claimant’s
agents to profit from those claims which have merit.




28.    Should lawyers be permitted to provide legal or other services to a third
       party at no cost to the third party in return for referrals or instructions
       for other business?



No. This is simply one of the mechanisms used to overcome the prohibition on
payment of referral fees in Scotland. As per our answer above, it is our view that the
prohibition on referral fees should remain, and be fully enforced.




29.    Should lawyers be permitted to make payment to a company, or some
       other body, either in money or by some other consideration, in order to
       have their name placed on a panel for the purposes of securing the flow
       of instructions in litigation?



No.

Per Response 28 above, this approach should properly be regarded as a device to
overcome the existing prohibition on payment referral fees. The fundamental
problems inherent in the referral fee system would still exist. The issues identified in
Response 27 would remain. In any event, the quality of referrals is extremely
variable. There can be no guarantee that the paying solicitor will profit from each
instruction which increases pressure on the system without benefit to anyone beyond
the referring party. Restriction to a panel based approach would only be of benefit in
the context of the regulation and management of the claims management companies
                                                                                     19
themselves. Such regulation or otherwise is likely to be out with the scope of this
review.




30.    Should the answers to questions 27, 28 and 29 be different, please
       explain why this situation should be distinguished?



Our answers are consistent.




31.    In the event that payment for referrals whether by money or provision of
       services as permitted, should there be a limit upon the value of the
       referral fee or services provided?



Our view is that payment for referrals should be prohibited as is currently the case.
In the event that they were to be allowed our view is that a limit should be imposed.
To allow payment of referral fees to be regulated purely by the market encourages a
less scrupulous approach and magnifies the issue outlined above regarding the
quality of the instructions provided. There is scope for conflict as between those
referring claims and their customers which may have knock-on consequences for
innocent claimants with legitimate causes of action.

We are aware that the insurance industry has been the subject of recent high level
criticism being the beneficiaries of the referral fee process and thereafter criticising
the quantity and quality of low value claims pursued. We agree with the ABI in their
support of an outright ban. Insurers accept that this ban will apply to them but also
consider it to be an important step which will simplify what is becoming an
unnecessarily complex system.




CHAPTER 7: BEFORE THE EVENT INSURANCE



32. Do BTE insurers adversely influence the conduct of the litigations which
they are funding?
                                                                                     20
We do not agree that BTE insurers adversely influence the conduct of the litigations
which they are funding. In our experience, in their selection of panel solicitors, BTE
insurers exercise control in ensuring that the panel are highly skilled and deal with
litigations in an appropriate manner. Increasingly, panel solicitors are the subject of
stringent audit and require to provide management information in relation to the
overall conduct of their cases. Accordingly, BTE insurers are offering to their
policyholders specialist and skilled legal advisers who will be best placed to conduct
the litigations in the best interests of the policyholders.




33. Is it appropriate for a lawyer in the direct employment of an insurance
    company to assess whether a policy holder’s claim falls within the terms of
    the policy?



We see no difficulty in lawyers in the direct employment of an insurance company
assessing whether a policyholder’s claim falls within the terms of the policy subject to
the right of the policyholder to challenge any such assessment.




34. Is it reasonably practicable for BTE insurance policy holders to be entitled
     to instruct any lawyer of their choice, at any stage?



As indicated by Lord Justice Jackson in his final report, consideration must be given
to the potential effect of such a change on BTE insurance premiums. By agreeing
fee charging structures with their panels, BTE insurers can monitor costs, and quality
of service to policyholders, which in turn has a positive knock-on effect on
proportionality. Such predictability will have a positive impact on their ability to fix
insurance premiums. Taking into account the decision of the High Court of Justice in
Webster Dickson LLP v Equity Syndicate Management Ltd [2011] EWHC 2661, if a
BTE insurance policyholder were entitled to instruct any lawyer of their choice, at any
stage, there would be an increased burden on the part of the BTE insurer in relation
to monitoring of potentially significant number of different lawyers both in relation to
their conduct of the case and assessing the reasonableness of their costs.



                                                                                     21
35. Should BTE insurance be encouraged and, if so, what suggestions would
     you make to address some of the criticisms levelled against it?



Recent research from organisations including Consumer Focus reaffirms inadequate
awareness within the general population of the availability of BTE insurance. We
consider that BTE insurance is a clear and explicit means of increasing access to
justice, and would support the views of both Lord Justice Jackson and Lord Young in
relation to the desirability of wider promotion of BTE insurance. Insurers may take
greater steps to publicise the availability of their cover and to highlight such
insurance.




CHAPTER 8: SPECULATIVE FEE AGREEMENTS



36. Are there any aspects of speculative fee agreements that require
    regulation?



We consider the ability to require a solicitor’s account to be taxed in relation to the
overall reasonableness of the fee to be sufficient regulation of speculative fee
arrangements in terms of the Solicitors (Scotland) Act 1980 Section 61 A.




37. What should be the maximum uplift for success fees in Scotland?



Prior to the introduction of recoverability of success fees through the Access to
Justice Act 1999, the Law Society of England and Wales recommended a cap for
success fees at 25% of damages payable to claimants. It was considered that this
was an adequate maximum percentage in order to safeguard claimants’ damages


                                                                                    22
while at the same time recognising the percentage of unsuccessful actions, where no
fee is recovered at the end of the day. We would endorse that position.




38. Should there be a cap on success fees as a percentage of damages? If so,
at what percentage and at what level and heads of damages?



Lord Justice Jackson recommended a cap of 25% of damages, excluding any
damages referable to future care or future losses. We would endorse this
recommendation.



39. Should success fees be recoverable in Scotland?               If so, under what
circumstances?



No.

The principle of a losing Defender in a specific case having to subsidise the costs
which the opposing solicitor may have lost in other cases is unjust. Recoverability of
success fees will have a grossly adverse effect on the proportionality of cases, and
claimants may consider themselves to be able to litigate risk free irrespective of the
merit or otherwise of their case. Recoverability will not properly address the issue of
access to justice - any person, of whatever financial means, will be entitled to enter
into a speculative fee agreement. There is no eligibility test.

Furthermore, the claimant in possession of a speculative fee arrangement will have
little interest in the level of costs which is generated on his or her behalf – the
claimant will almost invariably pay nothing whether or not the case is won.
Accordingly the claimant will exert no control whatsoever in relation to any costs
which are incurred. Costs will be driven by his or her solicitors.

Lord Justice Jackson has recommended that the English equivalent of speculative
fee arrangements should no longer be recoverable. He considers the cost burden
placed upon opposing parties to be excessive, and sometimes amounting to a denial
of justice. In our view it would be wrong to ignore the English experience which
resulted in this recommendation.




                                                                                    23
40. Should ATE insurance premiums be recoverable in Scotland? If so, under
what circumstances?



No.

ATE insurance premiums can be significant, and their introduction would only
increase disproportionality in cases. The market offering ATE insurance premiums is
small, and it is difficult to challenge the basis on which premiums are calculated on
the basis of reasonableness. Furthermore, if ATE insurance premiums were
irrecoverable, then there is an argument that market forces might operate to reduce
premiums.




CHAPTER 9: DAMAGES BASED AGREEMENTS (“CONTINGENCY FUNDING”)



42. Should the law be changed to allow solicitors and counsel to enter into
DBAs?



Damages based agreements, or contingency fees, have been part of the Scottish
litigation landscape for more than twenty years. They were the subject of declaratory
proceedings involving the Law Society of Scotland, Quantum Claims and Frank
Lefevre in 1991. That DBA arrangement was the subject of further litigation:
Quantum Claims Compensation Specialist Ltd v Powell 1998 SLT 228 which came
before the Extra Division on 19 December 1997. Since then it is understood that the
Quantum Claims model has been replicated by a number of pursuer personal injury
firms. It is understood that DBAs (with a referral fee element) underpin a significant
proportion of Scottish personal injury litigation. The precise percentage is not known
to us. The prohibition on contingency funding by Solicitors and Counsel arises from
the principle that such a contract is void and unenforceable as a pactum de quota
litis. However, as can be seen from Quantum Claims v Powell the prohibition has
little practical impact now given that means exist to effectively circumvent it. Given
that the current arrangements have existed for twenty years or more then it is at
least arguable that insofar as they represent the contractual wishes of pursuers on
one hand and claim management companies on the other, there is no harm in
extending their application to Solicitors and Counsel. Arguments have previously
been made regarding conflict of interest, but legal professionals remain bound by
professional standards of practice.

                                                                                   24
43.   Should claims management companies continue to be entitled to enter
into DBAs?



Quantum Claims has been operating in Scotland with a DBA model for more than 20
years. It has not apparently had the effect of distorting the marketplace. The DBA
funding model is one of a range of models which are available in Scotland. There is
an absence of empirical evidence which would suggest that claims management
companies in Scotland require to be the subject of extensive and invasive regulation.
The concern would be that a regulatory regime would require to be funded which
might well have knock on effects in connection with the cost of litigation generally.
The detailed regulation of claims management companies may fall out with the
scope of this review.



44.   If DBAs are permitted in Scotland:



      a. is it reasonable to expect successful pursuers to contribute some of
         their damages towards payment of their legal fees?


      DBAs effectively exist in Scotland at present. As they operate at present
      successful Pursuers do require to contribute some of their damages towards
      payment of their legal fees. The exact contribution will vary from case to case
      depending on the comparison between the contingency element and the
      recovery of judicial expenses from the unsuccessful party. Any change to the
      current position could only be achieved through either an increase in
      damages to reflect the contingency element or through an increase in the
      costs payable by the unsuccessful party. As already indicated, the current
      expenses regime works well in Scotland. There is no pressing need for a
      significant change to it.



      b. should there be a cap on the percentage of the damages that lawyers
         are entitled to charge?


      We are not inclined to suggest that there should be regulation of claims
      management companies and the DBAs which they enter into. The impression
                                                                                  25
is that present contingencies are relatively modest. However, freedom of
contract would suggest that it should be open for the Pursuer on one hand
and a claims management company on the other to enter into whatever
contractual arrangement they consider is appropriate for them, reflecting the
risk/reward ratio for any particular claim.



c. should the percentage recoverable under a DBA be applicable to all
   heads of loss?


There is no principled reason why any particular head of claim ought to be
ring fenced from the application of a DBA. Nevertheless there is an argument
that the occasionally very high values seen for future care / services should
be excluded. [IS THIS CONSISTENT WITH THE ANSWER TO QUESTION
38?]



d. should there be an increase in the level of damages awarded? If so,
   by what percentage and how is this to be achieved?


No.

The experience in the United States appears to be that DBAs are funded
through jury awards which are inflated to cover the expected contingency
arrangements. That is not an approach which is supported by us. To do so
would be inequitable. It would subvert the function of damages which are to
place the party back in the position from which he/she started but for the
alleged wrongdoing. Our current expenses regime works reasonably well. It
strives for both predictability and proportionality. Significant change is not
warranted.



e. what forms of protection may be required for clients entering into
   such an agreement?


We are not of the view that there is any empirical evidence to suggest that
there is any requirement for any degree of protection in Scotland at present.




                                                                           26
45.   If the current prohibition on solicitors and counsel entering into DBAs is
      retained, should steps be taken to prevent its circumvention by the
      formation of a claims management company in which solicitors are
      directors or shareholders?



      We are of the view that the operation of claims management companies in
      Scotland over the last 20 years has not disclosed any empirical evidence
      which would suggest that claims management companies should be
      regulated. The litigation involving Quantum Claims has demonstrated hitherto
      that separation has been required between firms and claims management
      companies where the same individuals are both partners and
      directors/shareholders. The issues around demarcation of roles were raised
      in Quantum Claims Compensation Specialists v Powell.                   While the
      arrangements in place in that case gave rise to some cause for concern they
      did not give rise to sufficient concern to merit striking down by the court.




46.   Should there be regulation of claims management companies operating
      in Scotland? If so, what are the mischiefs to be addressed and how
      should regulation be achieved?



      It is not thought that there is currently any empirical evidence to suggest a
      requirement to regulate claims management companies in Scotland.




Chapter 10 Third Party Funding



47   What are the risks/potential abuses involved in third party funding and
how might those risks be addressed?



We have no concern in principle as to third party funding from bodies such as Trade
Unions and professional associations.        We are not expert in their funding
arrangements with their members.

                                                                                   27
We support the English approach of champerty and believe that great care should be
taken in relation to the assignation (and hence the sale) of claims for a fee.




48     If regulation is desirable what form should it take?



We have no further comment to make.



49     Should a party to a litigation who has entered into a funding
arrangement be obliged to disclose details of that arrangement to any other
party and if so in what circumstances?



Litigation is expensive. If you choose or are required to be involved in a litigation you
ought to have the comfort of knowing that if you succeed you will be able to recover
costs from your opposition. In circumstances where there is an issue with one or
other party paying a costs award, such as a legally aided party, this should be made
clear at the outset of the case. The opposition then have options in terms of
applying to the court for caution to ensure that, so far as possible, unnecessary
expense is not incurred through the litigation process.




51    Should a CLAF or SLAS be introduced in Scotland? If so, which is
preferable?



As outlined in previous sections we feel that the current arrangement in Scotland
with personal injury cases being funded principally through DBA’s is working well
and does not require radical reform.




52    If such schemes were to be introduced what types of litigation should be
covered?


                                                                                      28
One might question why such a scheme, if it was to be funded by taxpayers, should
be introduced at all given the present scheme seems to be operating well.




53   If such schemes were to be introduced what should the minimum and
maximum disposable incomes of successful applicants be?



We have no view on this question.




54   Should such schemes be liable for payment of the expenses of
successful opponents?



If as suggested the schemes are only likely to be attractive to those who have cases
where the prospects of success are limited logic suggests that the danger of an
award of expenses should remain as otherwise such cases might be pursued in
circumstances where they ought not to be and unnecessary cost and court time will
be incurred. There is a concern that the conventional risk deterrents to litigation will
be upset otherwise.




55      What further steps, if any, should be taken to promote pro bono funding
of litigation and by whom?



We are very much in favour of the promotion of pro bono work. There is an
argument in favour of one way cost shifting in this area where a certificate is lodged
by the pro bono solicitor certifying that the case is being conducted on a pro bono
basis.




                                                                                     29
56     Should the Scottish courts have the power to oblige an unsuccessful
party in a civil litigation to pay judicial expenses where the successful party
has been represented on a pro bono basis and if so to whom should such a
payment be made?



The courts should have the power to order the payment of costs to a successful
party represented on a pro bono basis. Where there are matters of importance that
go far beyond the individual represented by the pro bono solicitor, such as for
example constitutional law issues, we believe that the pro bono solicitor should be
empowered to seek payment of some or all of the expenses and outlays incurred.
We would expect this power to be exercised sparingly.




CHAPTER 12: SCOTLAND LITIGATION MARKET

57      What steps could be taken to make Scotland the forum of choice for
litigation?

      This question clearly proceeds upon the basis of the statement of the Minister
      for Community Safety in the Scottish Government when he indicated that it
      was the Scottish Government’s desire to make Scotland a Forum of Choice
      for Litigation and to ensure access to justice for all of Scotland’s population.
      These are two different issues.

A)    A Forum of choice for litigation suggests a desire to expand the traditional
      boundaries of Scots Law to apply to disputes where Scotland’s jurisdiction
      would not be (without agreement) an obvious or competent forum. The
      Arbitration Scotland Act 2010 had as one of its objects a desire to extend a
      new arbitration procedure not just to the population of Scotland but to the
      World. Whilst it is too early to judge finally, it is our view that this approach is
      unlikely to be successful. We are also aware that for many years England
      has been seen as a competent forum of choice for disputes which might not
      otherwise be subject to the jurisdiction there. This may have been based
      upon London, being seen as the centre of insurance world-wide for many
      years. Scotland does not have such a heritage.

      Whilst we believe that the Scottish Legal System has much to offer the world,
      there are aspects that require reform, and some of that reform is either
      ongoing or scheduled. It is in our view doubtful that Scotland can ever rival
      England as a forum of choice. It may once have had that opportunity with the
      introduction and development of the Oil Industry from the 1970s. This now
                                                                                       30
      seems to be a missed opportunity. No initiative to develop Scotland’s
      jurisdiction as a forum of choice world-wide can succeed without considerable
      government intervention and financial support. It seems unlikely that any
      such financial support is likely to be available before the end of the current
      decade.

      We believe that Scottish Solicitors will have a considerable struggle to present
      the Scottish jurisdiction as a credible forum across the world given the
      substantial expansion of large firms of Solicitors headquartered or at least
      having a substantial base in England and spreading their offices across the
      world.

B)    The second leg of this issue is to ensure access to justice for all Scotland’s
      population. This is a quite different issue and one which we support whole
      heartedly. We believe at present that there are few circumstances in which
      Scotland’s population (individual and commercial) do not have the opportunity
      to seek access to Justice from a Jurisdictional perspective. The main
      restriction is clearly the cost of litigation which is addressed elsewhere in this
      review.




58. Apart from the introduction of a tariff-based system as described in
Chapter 3, what measures might be introduced to reduce the difference
between the actual cost of a litigation and the amount recoverable as judicial
expenses?


We have addressed this issue under question 13.



Tendering in respect of Costs

We would encourage the Committee to review the question of tendering in respect of
costs. Insurers in particular are paying substantial costs in the taxation of Accounts
unfairly and unreasonably. We would remind the Reference Group & Review Team
that tendering expenses has, for many years, existed in England and Wales and
appears to work extremely well. It is a means of ensuring that the unsuccessful
party may not require to pay all the costs of taxation following a reasonable sum
having been tendered and rejected.

We would give the following example of a successful Pursuer submitting an account
for £100K. A Tender is made of £85K in settlement of said costs in advance of the
                                                                                     31
taxation. The Tender is refused. The Account taxes at £80K with £4K+ taxation
costs being payable. Is it fair and reasonable for the unsuccessful Defender to pay
the costs of the taxation process when they have previously offered settlement of the
Account in a figure higher than is ultimately determined by the Auditor to be
appropriate? Given that the agents acting on behalf of the party seeking payment
are entitled to charge for their involvement in the taxation process (and recover such
costs as part of the judicial account) then it follows that there is presently no
incentive for the taxation process to be settled by agreement except where the sum
offered in settlement is significantly more than it is anticipated would be determined
by the Auditor. Such situations arise on numerous occasions and if our proposed
system was brought into line with that of England & Wales, then not only would
paying parties save considerable expense but also we suspect that the number of
taxations would diminish reducing costs generally and speeding up the litigation
process.




59.   If a one way costs shifting regime is introduced in England and Wales,
      but not in Scotland, would this create an incentive to litigate in England
      and Wales?

      We agree with the Personal Injury Practitioner whose views are stated in
      paragraph 12.9 of the discussion paper. It is not clear that what might be
      regarded as attractions of the Scottish system (including enhanced damages
      offered by Juries and aspects of Industrial Disease cases) are leading to any
      significant transfer of work from England and Wales to Scotland. Whether this
      is based on inertia, familiarity with one’s own system and legal advisors,
      ignorance or something else is unclear. The fact is that there is no trend of
      litigants moving from one jurisdiction to another. We believe that the same
      would be the case if a one way costs shifting regime were introduced in
      England and Wales.

      To some extent this question is also tied up with the likely future availability of
      Legal Aid, particularly in clinical negligence cases. Scotland has a credible
      jurisdiction with Solicitors, Counsel and expert witnesses who are able to
      support clients. Funding of litigation in Scotland has been much less
      problematic than in England and Wales as can be seen by the number of
      cases where litigation occurs over costs South of the Border. We believe that
      if a costs shifting regime were introduced in England and Wales then there
      would be little impact on the Scottish jurisdiction.


                                                                                      32
60.    If damages based agreements are introducing in England and Wales, but
       not in Scotland, would this create an incentive to litigate in England and
       Wales?



       There are of course jurisdictional issues which could arise preventing Scottish
       citizens or corporations from litigating as a matter of their own personal choice
       in England. Nevertheless there will be cases where there is a choice. This
       would probably be more by way of coincidence than design for individuals as
       distinct from corporations.        The success of any contingency based
       arrangement in England and Wales will be judged by users of the Court
       system there as success or otherwise based upon the extent to which they
       are required to pay over part of their damages settlement in payment of their
       lawyers’ fees.

       The introduction of such contingency fee arrangements for non lawyers over
       20 years ago within Scotland has made little impact with no long term
       discernible move towards the contingency based approach. On the strength
       of that experience we do not consider that if damages based agreements
       were introduced in England and Wales that would prompt an exodus of cases
       from Scotland.




CHAPTER 13: SPECIAL CASES AND CONCLUDING REMARKS



61.   Do clinical negligence claimants face particular difficulties in the
funding of claims?



There are few (if any) other classes of personal injury claims where an expert report
is a pre-requisite to establishing liability. Often a claimant in a clinical negligence
case will require to obtain both a liability report from a medical professional and also
a causation report in addition to any other quantum reports which may be required.
Those reports are generally more expensive than a standard personal injury report.
There is often a spend in the region of £2,000 on reports before the claimant knows
whether or not they have a stateable case.


                                                                                     33
It is difficult, if not impossible, for a lawyer to advise on whether or not an action by a
particular health professional is likely to be negligent without the benefit of expert
reports. That is not the case in a standard workplace accident or road traffic matters.
We understand that solicitors firms are extremely reluctant to take on such cases on
a speculative basis, funding the outlays. We understand that some firms no longer
undertake medical negligence work as it is seen as too risky.

According to the pressure group, Action against Medical Accidents, there is marked
discrepancy between the number of medical negligence cases south of the border
and the number north of the border on a per capita basis. Whilst it could be
postulated that that is because the standard of NHS treatment here is better, that is
unlikely to be the explanation. Access to justice issues are probably what keeps the
number of claims down.

The vast majority of clinical negligence litigation is handled by one entity which has
particular view as to how best to handle claims and litigation. It can be difficult, for
example to obtain precognition facilities to speak to NHS staff. Voluntary pre-action
protocols are not supported.

These difficulties previously lead to the retention of the availability of legal aid
funding for clinical negligence claims in England and Wales. It is now proposed that
that this funding should be withdrawn. In Scotland, the legal aid criteria are strict.
Even if you have a claim for a child you require to disclose the whole family’s income
when applying for legal aid. Also, the strictures inherent in legal aid work are felt
particularly in the context of clinical negligence cases,




62.    In the event that DBAs are not otherwise recommended, should they be
       available for the funding of multi-party actions?



We are not of the view that there are any particular facets of the funding of multi
party actions which make significant difference to the arguments surrounding DBAs.




63.    If DBAs are not recommended for multi-party actions, how else may
       lawyers be remunerated for the additional responsibility involved in
       such actions?



                                                                                        34
      We are of the view that the introduction of compulsory Pre-Action protocols
      would in turn bring with it enforceable expenses rules in connection with the
      settlement of claims which are not themselves the primary focus of litigation.
      Such an arrangement will bring with it the means to fund multi-party actions.

      On a practical basis, DBAs are currently available in Scotland through claim
      management companies. Whether they will be available to a claimant in the
      context of a multi-party action is likely to depend on the prospects of success
      of the claim. The risk/reward ratio will apply. There is no particular reason to
      suggest that any other arrangement ought to apply.




64.   Should the funding arrangements for multi-party actions cover the
      payment of legal representation and disbursements?



      There is no principled basis for changing the current position whereby the
      unsuccessful party becomes liable for the expenses incurred in defending an
      action. Multi-party actions do not represent a distinctively different type of
      claim which should be funded differently.



65.   Should the power to apply for a PEO in Scotland extend to multi-party
      actions and, if so, should there be any restrictions on their availability?



      This is not an area in which we have any detailed experience. As previously
      indicated, our view is that public interest cases ought to be left subject to
      judicial discretion to be determined on a case by case basis according to their
      respective merits.

      The Scottish Government has published proposals for a cost capping
      scheme. Any multi-party extension to the availability of PEOs would require a
      cost capping scheme which was proportionate.




66.   In addition to the cases identified in Chapter 13, are there any other
      cases that may require special consideration? If so, what are they and
      why?
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      One scenario which might merit special consideration arises from particularly
      difficult cases where access to funding results in problems in access to justice
      which can only be addressed through pro bono representation. In those
      circumstances, as indicated above, it is possible to make a very specific case
      for one way cost shifting where a certificate is lodged with the court confirming
      that pro bono representation is taking place. In those circumstances, judicial
      discretion should still be required to authorise a case specific one way cost
      shifting regime.

      However, in general terms our position is that the current expenses regime
      works well. Broadly speaking it delivers a certain degree of both predictability
      and proportionality.




67.   Can you suggest any means, other than those raised in this consultation
      paper, which would enable litigation to be more affordable?



      The underlying principles which ought to underpin any basis of litigation
      funding are predictability and proportionality. For any system of litigation
      funding to work properly those embarking upon litigation, either as claimant or
      respondent, should be in a position to properly predict the likely cost of the
      exercise and should be assured that the cost will be proportionate to the
      issue. Our traditional approach involving primarily block fees to calculate
      expenses has gone some way to ensuring both predictability and
      proportionality. A cap on costs would go further in achieving proportionality.



68.   What other recommendations might this Review make to enable
      individuals to fund a litigation when they are not eligible for legal aid,
      have no BTE insurance cover or their cover is inadequate, cannot afford
      the ATE insurance premium and are not members of an organisation
      that meets its members’ legal fees?



      We are of the view that there has long been a tradition of pro bono
      representation in Scotland. That runs from Citizens Advice Bureaux and other
      advice agencies at the lower end of the tier to solicitors and counsel acting on
      a pro bono basis for a period of their working lives. Pro bono work should be
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     seen in the context of our underlying corporate social responsibility, which
     manifests itself in other charitable endeavours.




February 2012




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