Our site focuses on access to justice and all tools and services utilised in the pursuit of funding litigation. Justice is accessed through a variety of funding options. A tool that lawyers in the United Kingdom and the USA have had at their disposal for many years are Damages Based Agreements (DBAs). It is something Scotland has not permitted until now. The Scottish Government have now permitted DBAs along with introducing Speculative Fee Agreements (SFAs) in their new Civil Litigation (Expenses and Group Proceedings) Bill on the 1st of June 2017.
DBAs allow solicitors to take a case with no upfront payment from the client. Instead they ensure their fees are reimbursed by taking a percentage of the damages from a claim if they win. If the case proves to be unsuccessful then no fee is due or simply a lower fee is due. It ensures the solicitor has skin in the game and clients like it because they are sharing risk. The other option is an SFA. They are similar to DBAs in many respects except that the client may become liable for the costs of their opponents.
The Scottish bill allows solicitors to get creative with how they wish to structure their risk. Solicitors can charge for part of their expenses as a standard client retainer and place the remaining fees under the DBA. It is likely the maximum permitted DBA fee will be capped at 50% of the monetary award recovered. Partial DBAs cannot be used in England and Wales.
Scotland have been careful to limit the scope within which DBAs can be applied. Section 5 of the Civil Litigation Bill states that a DBA cannot be used in family actions. Section 6 details that personal injury cases must be taken on a ‘no win no fee’ basis. It is worth noting commercial cases can be taken on a ‘no win lower fee’ arrangement. Damages awarded for future loss can also be added to the success fee but only if they are awarded as a lump sum.
As part of these changes the Scottish Government has also made provisions for the disclosure of the litigation funder involved. We have explored this section in detail in a previous article.
“Subject to the detail in secondary legislation, the bill offers the prospect of Scotland going from having little specific provision for litigation funding for commercial disputes to a situation where there is greater clarity but also flexibility of terms for litigation funding than there is in England and Wales,” – Jim Cormack, Pinsent Masons
It is worth noting these changes are subject to regulations yet to be published but the Civil Litigation Bill for the most part is a welcome step forward by the Scottish Government. The legislation surrounding disclosure of funders is still where the big question mark rests.