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Taylor Review recommends radical reform to Scottish civil litigation funding

Out-Law News | 13 Sep 2013 | 1:24 pm | 2 min. read

Scottish lawyers would be able to enter into enforceable 'no win no fee' conditional fee agreements (CFAs) in civil court cases if the conclusions of a wide-ranging review of civil litigation funding are accepted by the Scottish Government.

The Taylor Review, conducted by former Sheriff Principal of Glasgow and Strathkelvin James Taylor, sets out 85 recommendations for radical and substantial changes to the current system. It was commissioned in March 2011, and follows a similar exercise conducted in England and Wales by Lord Justice Jackson. Civil court reforms based on Jackson's recommendations came into force on 1 April this year.

Setting out his report, Sheriff Principal Taylor said that his intention was to remove "obstacles" to access of justice, both in terms of the cost of litigation and recoverability of expenses.

"The key issue for me was how to improve access to justice in a meaningful way; in many cases, 'meaningful' means being affordable for the private individual," he said.

"However, access to justice is a wider concept. It embraces the ability for any legal persona, be they individuals or commercial enterprises, to have access to the courts in order to attempt to vindicate their legal rights. Obstacles to access to justice can extend beyond the issue of affordability. Recoverability and predictability of expenses can be just as important," he said.

Civil litigation expert Craig Connal of Pinsent Masons, the law firm behind Out-Law.com, said that the recommendations deserved "careful scrutiny". However, "two areas of tension are immediately apparent", he said.

"Any laudable attempt to assist access for claimants has to be balanced against the impact that ill-founded claims giving rise to no cost consequences can have," he said. "There is a track record demonstrated by some party litigants which shows what can happen."

"Secondly, the great strength of commercial courts in Scotland has been their procedural flexibility and it would be important to ensure that overlaying additional cost rules does not make them less attractive," he said.

Among Taylor's recommendations is allowing solicitors to offer their clients 'no win no fee' agreements, under which their fee would be calculated as a percentages of the damages recovered. These agreements cannot currently be enforced by solicitors but third party claims management companies (CMCs) can enter into them with their clients.

According to Taylor, there is a "good argument" for changing the law to allow these agreements, which are "popular with the public and easily understood". In some cases, firms of solicitors have set up separate companies so that they can offer these agreements to their clients, he said. The amount that could be deducted from one of the new damages-based agreements (DBAs), as proposed by Taylor, would be capped depending on the type of case and the value of the damages awarded.

The report also recommended the introduction of qualified one-way costs shifting (QOCS) in personal injury cases, meaning that the party bringing a personal injury claim should generally no longer run the risk of having to pay the other side's legal expenses if the court action fails. This would not apply where there has been fraud or abuse of process. In addition, if the pursuer does not accept a settlement offered by the other side and is not awarded a sum greater than this amount, the court would be able to limit the other side's liability to 75% of the damages awarded if it finds that the pursuer acted unreasonably by not accepting the offer.

Taylor also recommended the introduction of expenses management in certain types of commercial actions. He proposed that a pilot scheme, under which solicitors would have to prepare estimates of the likely expenses in a case at its outset and courts would be able to make summary awards of expenses, should be offered for commercial actions in the Court of Session and the sheriff court.

The report did not recommend the abolition of referral fees, payable by solicitors to insurers, case management companies and others in return for cases being passed to them. Although referral fees were abolished in England and Wales, following the recommendations of the Jackson Report, Taylor said that his "radically different conclusion" was down to the fact that what Jackson had recommended for England and Wales "differs little from current practices" in Scotland.