1 MOTOR ACCIDENT SOLICITORS SOCIETY RESPONSE TO LORD TAYLOR S REVIEW OF EXPENSES AND FUNDING IN CIVIL LITIGATION IN SCOTLAND March 2012 Introduction The Motor Accident Solicitors Society (MASS) is a Society of solicitors acting for the victims of motor accidents, including those involving personal injury (PI). MASS has 180 solicitor firm Members throughout the United Kingdom, with 15 being based in Scotland. We estimate that member firms conduct upwards of 500,000 PI motor accident claims annually on behalf of the victims of those accidents. The majority of such claims in Scotland are dealt with by a MASS member firm. This response is prepared on behalf of the Scottish Members of the Motor Accident Solicitors Society (MASS). Consequently all reference to MASS within this response relates to the Scottish members of this Society. The objective of the Society is to promote the best interests of the motor accident victim. This is central, and core to our activity. We seek to promote only those policy and other objectives which are consistent with the best interests of the accident victim. We seek to set aside any self interest in promoting these arguments, recognising that we are in a position of trust, and best placed to observe the best interests of motor accident PI victims first hand. We are a not for profit organisation, which requires specialism in motor accident claimant work as a pre-requisite for membership. We also have a Code of Conduct which member firms are required to abide by, which is directed to the best interests of the motor accident victim. Contact: If you have any queries or would like further information, please contact at first instance Tony O Malley at: HBJ Claim Solutions LLP 247 West George Street Glasgow G2 4QE Tel:
2 Executive Summary MASS primary objective is to promote the best interests of the accident victim and their right to affordable access to justice. The cost of litigation and the uncertainty surrounding their exposure are major factors that may deter litigants from pursuing their rights. MASS believes that the accident victims damages are sacrosanct. Consequently, solicitors fees should remain recoverable as currently constituted and would propose that a review is undertaken by the Scottish Civil Justice Council, when constituted. MASS would cautiously support the implementation of a one-way costs shifting regime, but without any form of qualification save that of fraud. It is however vital that this is considered with great care to avoid unnecessary satellite litigation and any potential detriment to the accident victim. MASS acknowledges that the payment of referral fees, in whatever form, is now commonplace in Scotland but does not increase the costs or funding of litigation. We would however wish to see greater transparency and regulation to inform client choice. With the introduction of Alternative Business Structures in England and Wales, MASS would also advocate allowing similar fee sharing opportunities in Scotland to ensure that Scottish legal practices can compete equally with other jurisdictions. MASS acknowledges the benefits of BTE insurance and its place in providing access to justice to the accident victim. We would however agree with Lord Gill that such cover does have its limitations and short comings, namely the disparity in level of cover and indemnity. Consequently MASS would urge caution when considering making BTE insurance compulsory, which could potentially result in higher premiums and thereby reducing the affordability of this funding option. MASS believes that the current system of speculative fee agreements backed up with ATE insurance can provide an effective alternative to funding litigation and therefore provide access to justice. Recoverability of such fees, as seen in England and Wales, has created considerable satellite litigation and problems which benefit no-one. However, MASS reiterates its belief and principles that the wrongdoer pays and that there should be no reduction from the accident victims damages. MASS would therefore not advocate a change in recoverability in ATE premiums in Scotland, but would urge a review of recoverable judicial costs to be bought more in line with actual costs of bringing a claim. MASS does not agree with damage based agreements. They would not only further erode the principle of accident victim being returned to the position they were prior to the accident, but they would not be in the bests interests of the accident victim, especially for the most seriously injured. MASS believes that as in England and Wales, claims management companies in Scotland should be regulated and safeguards put in place to drive out malpractice and provide a robust complaints handling procedure in order to protect the consumer.
3 CHAPTER 2: ACCESS TO JUSTICE 1. What are the main reasons relating to the cost of litigation that discourage potential litigants from court action? MASS believes that affordable access to justice with many entry points should be the blueprint of the civil justice system in Scotland. MASS would agree that the cost of litigation is a deterrent to potential litigants. Many of the clients MASS members represent have had little or no experience of the legal process, are of limited financial means and are inherently reluctant litigants. In a motor claims context, litigants are discouraged due to lack of certainty surrounding costs, an inequality of arms when faced with the resources available to insurance companies and the fear that judicial expenses may not cover all of the agent-client costs and disbursements. Potential exposure to third party costs prevents litigants from pursuing their rights and constitutes a denial of access to justice. There is often the perception that litigation will be a lengthy and complex process. 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? MASS favours the block fee as currently constituted. It provides relative certainty and simplicity in formulating accounts. It removes variances such as the level and hourly rates charged by solicitors of differing experience. It allows accounts to be drafted efficiently and quickly in house, thus reducing time and potential expense. We are in agreement with the recommendation of the Scottish Civil Courts Review that there should be a significant increase in the block fee for pre-litigation and proof preparation to reflect work properly and reasonably carried out in connection with investigation, intimation, negotiation and, in a motor claims context, compliance with the Scottish Voluntary Pre-Action protocol. Expenses for lower value personal injury cases are broadly the same whether settled pre-litigation or at an early stage of proceedings. There is no incentive for insurers to comply with the protocol and unnecessary pre-litigation work is frequently undertaken due to non adherence. 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? MASS considers that the appropriate body to review the level of fees would be the Scottish Civil Justice Council when constituted. It has a wider policy role to advise and make recommendations to improve civil justice in Scotland and this should include expenses provision. 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? MASS considers that the current test is appropriate. However sanction should be sought by motion at the commencement of the action or, at a later stage, on cause shown. This would promote greater certainty regarding expenses. Such an application should apply equally to Solicitor Advocates. The same test and process
4 should apply to senior counsel although MASS is of the view that requiring sanction from the Court of Session may facilitate delay and add additional expense. 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? MASS considers the reasonableness test should be applied by the presiding judicial officer. Reports not disclosed or founded upon should also be recoverable if reasonably required to progress investigation of the merits of the action. The courts should be permitted a wide discretion in such circumstances. 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? No. There are circumstances where Counsels input and instruction is both reasonable and necessary pre-certification. 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? No. There are circumstances where Senior Counsel s input and instruction is both reasonable and necessary pre-certification. 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? MASS does not agree that the presiding judicial officer should assess the reasonableness or otherwise of counsel s fee. This may involve additional court time and expense. The current system of assessment by the Auditor of court is adequate although greater consistency and guidance should be promoted. A tariff system of Counsel s fees could be introduced providing both fair renumeration and greater cost certainty. There ought to be scope for either party to apply to Court when there is a dispute on the level of fees charged particularly on Counsel or Solicitor Advocates' fees. If there is a provision for a party to apply to the Judge who heard the substantive hearing and therefore has full knowledge of all the issues relating to the conduct of the parties and other such matters as well as having knowledge of the complexity value and importance of the case, then this may assist in resolving what can often be long running disputes about fees. 9. From when should the fees of an expert witness be a competent outlay in a judicial account of expenses? From the point such fees are reasonably incurred. Again the reasonableness test should apply with wide discretion to the presiding judicial officer. 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?
5 MASS does not agree with judicial officers expending valuable court time in summarily assessing the reasonableness or otherwise of expert witness expenses. The current system is adequate although provision should be made to allow the Auditor of court to obtain a Note from the presiding judicial officer if appropriate. 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? MASS does not consider a commitment fee to be appropriate and view it as anachronistic. 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? MASS have no comment to make. 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? MASS would be opposed to such a system and believe it would be problematic to structure and implement. The potential value of a claim is not indicative of its complexity, the time expended in investigating the evidence, nor of issuing proceedings. Chapter IV of the Table of Fess allow for a 50% reduction in personal injury cases settling for cases settling at less than This reduction is anomalous and appears to be based on no more than an arbitrary assessment of the level of damages. Such cases can often involve investigation of both liability and quantum and the level of recoverable expenses is simply not reflective of such work. 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? MASS does not believe such a system to be either desirable or workable, particularly in a motor claims context. It would result in greater uncertainty in the assessment of judicial accounts and would possibly increase complexity. It may also lead to solicitor practices employing more experienced solicitors to maximise return, to the detriment of the junior profession. 15. Is the ability to request an additional fee a reasonable procedure for regulating the recoverability of judicial expenses? The current procedure for seeking an additional fee is adequate. MASS would observe that were the judicial fees recoverable on success of litigation to be made more reflective of the actual time and costs incurred, then there would be less of a requirement for solicitors to seek an additional fee. 16. If the concept of an additional fee is retained: At what stage in the proceedings should a motion for an additional fee be made? 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?
6 Any such motion for an additional fee should be made at the conclusion of a case and should be heard by the presiding judicial officer. The auditor of court should fix the percentage when assessing the account of expenses. 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? MASS considers that interest should run on an award of judicial expenses. Such interest should accrue 28 days from the date the expenses are agreed party/party or taxed. In a motor claims context, it is common for agreed or taxed expenses to be outstanding for a considerable period beyond 28 days. Such expenses are in most cases due to be satisfied by the liability insurer and so there should be minimal delay in payment. Additional expense is often incurred pursuing such expenses. Interest should accrue at the presiding judicial rate in force at the material time. CHAPTER 4: FURTHER ENHANCING THE PREDICTABILITY OF THE COST OF LITIGATION 18. Should the court have 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? MASS is of the view the current provisions are adequate. There requires to be a potential deterrent to vexatious litigants and insurers who lodge skeletal or spurious defences and then do not proceed. MASS considers the current small claim expenses provisions are inadequate in a motor claims context and do not reflect the extent of investigation and work undertaken in such cases. There needs to be sufficient flexibility built into the system which will allow the party that has been put to additional expense to recover sums over and above the current fixed recoverable expenses. 19. Should more cases in Scotland come under the scope of a fixed expenses regime? If so, what types of case should be included? MASS do not favour a fixed expenses regime for the reasons outlined in Answer 13. The level of expenses recoverable should be commensurate with the amount of work reasonably expended. 20. Should each party to a litigation in Scotland bear their own expenses? If so, in what types of litigation? Should the rule be qualified and, if so, in what circumstances? In particular, is the general rule in family cases appropriate? MASS would cautiously welcome the implementation of a workable method of introducing one-way cost shifting which would make the system truly effective in helping injured people. It is the potential qualification that would cause MASS members some concern. Fraud should be the only justifiable qualification in our submission. However there are potential difficulties not easily overcome. There would be little to deter vexatious claims or unreasonable behaviour if one way cost shifting is introduced. The general principle that in the ordinary course costs follow success, is of fundamental importance in deterring pursuers from bringing and defendants from defending actions they are likely to lose. Any rules would need to cover instances
7 that are so diverse that they themselves could result in satellite litigation to establish what is and is not reasonable. Such Rules would need to be carefully drafted and considered to avoid the courts being swamped by litigants in person, particularly at a time when the courts administrative budget is under pressure. A major concern is the uncertainty of what lies ahead for the pursuer who makes the claim. For example, in a Scottish context, the situation would arise where a defender offers pre-litigation 2000 on a month whiplash claim and will not increase (oftentimes due to a binding calibration of damages). The JSB Guidelines and indeed current case law may suggest that the injury is worth up to Proceedings are raised. The court may then award Would a 10% increase in damages be seen as frivolous when the costs of obtaining this increase far outweighs the extent of the costs? Also the whole issue of how one way cost shifting would operate when a judicial tender was lodged would need very careful consideration. MASS agree that if one way cost shifting is introduced then the need for ATE is reduced. However there would still be a need. The example provided above is one such situation where ATE may be required, as would the tender situation. At such a crucial point in litigation ATE premiums would be prohibitively high and cover difficult to obtain. In lower value cases such premiums would be disproportionate to the value of the claim and the litigant may have to accept offers less than a case is reasonably worth. Additional court time may also be required if, for example, a sist is sought to source ATE cover. 21. Should a procedure for the summary assessment of expenses be introduced into the civil courts in Scotland? MASS do not favour such a system which could be cumbersome and not the most efficient use of court time. Additional time and resource would be required to carry out such summary assessment at a time when there is already sufficient pressure on the Scottish Court System. More judicial time would be taken up fulfilling a function the Auditor or Sheriff Clerk can usefully (and perhaps more efficiently) undertake. 22. If a procedure for summary assessment was introduced, in what circumstances should the summary assessment of expenses take place and should it be restricted to any particular types of action? Answer 21 refers. 23. Would there be any benefit in introducing a procedure of submitting schedules of expenditure similar to the pilot scheme operating in the Birmingham Mercantile Court and TCC? MASS do not see any benefit in such a system applying to road traffic cases. 24. Apart from imposing sanctions, what other powers, if any, should be made available to the courts to promote predictability and certainty of judicial expenses?
8 The current sanctions available to the court are sufficient and MASS do not consider that additional powers are required. CHAPTER 5: PROTECTIVE EXPENSES 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? 26. Should limits be set on the level at which a PEO is made or should this be a matter for judicial discretion? MASS has no comment to make. 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? 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? 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 purpose of securing a flow of instructions in litigation? 30. Should the answers to questions 27, 28 and 29 be different, please explain why the situations should be distinguished. 31. In the event that payment for referrals, whether by money or provision of services, is permitted, should there be a limit upon the value of the referral fee or services provided? MASS would answer in the affirmative to questions 27, 28 and 29. In relation to question 31, a limit should not be set upon the value of the referral fee or services provided these should be market dictated. MASS members acknowledge that payment in return for case referrals, whether by panel membership fee, marketing share or free advice and representation, is now commonplace in Scotland. We would, going forward, welcome greater definition and clarity around the phrase referral fee. Members are referred cases from a number of sources including insurance companies, legal expenses insurance companies, claims management companies and trade unions. It is the considered view of MASS that such payments are, whilst generally undesirous, a commercial reality and, contrary to the position advanced by the Law Society of Scotland, do promote the highest service standards in the profession. For example, the majority of (pursuer) Law Society Accredited
9 Specialists in Personal Injury Law are employed by firms who make such payments. Additionally, sophisticated case management systems are routinely utilised to progress such motor claims, all to the benefit of the client. It is submitted that such innovative use of Information Technology and proactive case management could act as a blueprint for the Scottish Courts system, particularly in the area of personal injury. MASS also submit that such referral payments do not increase the costs or funding of litigation in Scotland. MASS members routinely allocate marketing budgets to cover such panel membership fees or referrals. The cost of any such payments are borne entirely by the firm of solicitors, usually from such a marketing budget which, otherwise, would be used for television, internet or newspaper advertising etc. If such referral fees were banned, there would, in all likelihood, be an increase in solicitors advertising in the media. Such advertising is commonplace in England and Wales and whilst there is an argument that it increases awareness of consumers rights, do we want such a proliferation of such advertising in Scotland? If such payments are to be permitted then there requires to be greater transparency and regulation to inform client choice. Currently in Scotland, there is no transparency around such payments. Clients are not routinely informed, for example, of any payment made for panel membership. As evidenced at page 18 of the Consultation Paper, the total number of claims for motor liability in Scotland was one twenty fourth of all claims made in England and Wales for the period The market in Scotland is therefore substantially truncated in comparison but the point must be made that many of the providers of such case referrals are based and operate in England and Wales. Scotland is therefore dependent to a significant extent on the English market and their regulatory provisions. The LASPO Bill in its current form bans referral fees, despite the Legal Services Board for England and Wales recommending retention subject to increased regulation and transparency. The ban is largely in the context of contributing to the increasing cost of motor insurance premiums. Suggestions have also been made that such a ban is politically motivated. It is therefore submitted that such a context is not relevant in Scotland. If referral fees were banned in Scotland but not in England, Scottish firms would be placed at a significant competitive disadvantage. It is likely Scottish jurisdiction cases would be dealt with by large English motor claim practices. Indeed this already happens with reasonable frequency but would only increase. MASS would go further and allow fee sharing between lawyers and non lawyers (insurers, LEI s, CMCs). This is now permitted in England and Wales under their new Code of Conduct from 6th October One of the aims of the Legal Services Act 2007 was to open up the market for legal services, allowing non-lawyers to participate in the ownership of legal firms under Alternative Business Structures. In England and Wales, therefore, the changes in ownership provision allowed by the Legal Services Act is that they provide a ready made means of avoiding the ban on referral fees. It is difficult to see how there could be any objection to fee sharing within an ABS. For this reason the proposed ban on referral fees in England and Wales saw an increase in the interest of ABSs. In summary, therefore, MASS take the view that the Scottish position on referral fees (and any ban thereof) would really have to mirror the commercial situation in
10 England and Wales to allow Scottish practices to compete equally with other jurisdictions as well as unregulated providers of similar services. CHAPTER 7: BEFORE THE EVENT INSURANCE 32. Do BTE insurers adversely influence the conduct of the litigations which they are funding? 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? 34. Is it reasonably practicable for BTE insurance policy holders to be entitled to instruct any lawyer of their choice, at any stage? 35. Should BTE insurance be encouraged and, if so, what suggestions would you make to address some of the criticisms levelled against it? MASS acknowledge that current BTE insurance arrangements have a place in providing motor accident victims access to justice. Such policies can be sourced relatively cheaply at the point of insurance inception. It is recognised that there can be difficulties concerning the portability of such cover and the client freedom of choice. BTE insurance can also provide access to justice for injury victims who otherwise may require legal aid to pursue a claim. At the same time it must be recognised that the placing of bulk BTE work via a panel solicitor will benefit a policyholder in being able to access legal assistance whether for personal injury or for economic loss. BTE providers routinely impose strict Service Level Agreements on their panel firms, to the benefit of the client. Compliance audits are undertaken. Funding is provided for low value but meritorious claims to be pursued. Many such uneconomic cases would simply not be undertaken if a BTE policy were not in place. An example would be a third party fire and theft claim with a value of 2500 where liability was at least notionally in dispute. Such a Pursuer may be deterred from bringing such a claim without the benefit of BTE. Many thousands of such low value, non profitable claims are undertaken by MASS members each year. However MASS do not believe that BTE insurance arrangements can provide the complete answer to the funding of Civil Litigation in Scotland. For one, we do not consider that the general public would accept an additional levy imposed on their motor insurance premiums occasioned by a compulsory BTE scheme. In addition, there are a number of shortcomings which operate in practice with current BTE schemes and which would likely continue into the future. Many schemes provide something of a fiction of client cover and indemnity via the BTE provider, with the reality being that the instructed solicitor is expected to carry the risk of litigation.
11 Even where the BTE provider does provide indemnity to costs, the sufficiency of cover may also impose restrictions in terms of what a solicitor can do (e.g. in terms of expenditure for expert reports or in terms of issuing proceedings) and whether the claim is eligible at all in the particular circumstances of the case. Indemnity is often limited to 50,000 which in higher value cases can be inadequate. Where the indemnity obligation lies with the BTE provider, there will inevitably be decisions made by the provider as to coverage and indemnity and it is difficult to see how that could be changed without rendering such schemes economically unattractive and unviable to the BTE providers as they currently exist. MASS would respectfully adopt the position taken by Lord Gill in his Review where he recognised the limitations of BTE cover and declined to recommend the adoption and imposition of compulsory BTE cover. CHAPTER 8: SPECULATIVE FEE AGREEMENTS 36. Are there any aspects of speculative fee agreements that require regulation? 37. What should be the maximum uplift for success fees in Scotland? 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? 39. Should success fees be recoverable in Scotland? If so, under what circumstances? 40. Should ATE insurance premiums be recoverable in Scotland? If so, under what circumstances? 41. If success fees and ATE insurance premiums remain irrecoverable in Scotland, is it reasonable to expect successful pursuers to contribute some of their damages towards payment of their legal fees and insurance premiums? If not, what are the alternatives? Speculative fee agreements, backed up with ATE insurance can be an effective means by which Scottish accident victims are permitted access to justice, where other funding means are not available to them and where the claimant cannot afford to pay costs privately. In a motor claims context ATE cover is now freely available in Scotland through a number of reputable providers. ATE insurance can reduce the reliance of many pursuers on legal aid as the only potential source of funding. Indeed ATE insurance premiums are often substantially less than any legal aid contribution that might be levied. Such policies can be sourced for a premium in the region of 200. MASS would, however, reiterate that there should be no deduction from client damages. However if an uplift is to remain, the current regulation of success fees to a current maximum uplift for success fees of 100% of costs, but limited to a maximum cap of 25% of client damages, excluding future losses) is adequate.
12 MASS would observe that were the judicial fees recoverable on success of litigation to be made more reflective of the actual time and costs incurred, then there would be less of a requirement for solicitors to charge uplifts in fees to clients. As the Consultation Paper (November 2011) observed, recovery of expenses can be as low as 50% of the actual cost in pursuing a claim. Bringing recoverable judicial costs up to a level much closer to the actual costs of bringing a claim would reduce charges made to clients and would be in keeping with the principle that the negligent wrongdoer pays, a principle supported by MASS. The issue concerning recoverability of ATE insurance premiums and success fees is not straightforward. MASS at UK level has continued until recently to support the recoverability of both, this stance supportive of the principles that the wrongdoer pays and that the injury victim should not have a deduction from damages. The purpose of a compensation payment is to put the injured party back into the preaccident position, not to provide him/her with any windfall. They have also been supporting retention of the position as it exists currently in England and Wales. However the national position has been re-assessed recently and MASS, in conjunction with APIL and the Law Society of England and Wales, will be putting forward amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill, which involve enabling claimants, in most cases, to pay their own insurance premiums to insure against paying third party costs (after-the-event, or ATE insurance premiums). In Scotland, ATE premiums and client success fees have never been recoverable. The undesirable increase in satellite costs litigation in England which has had a significant effect on case durations (prolonging stressful litigation for clients and creating cash flow problems affecting viability of solicitor practices) is likely to be the driver for wholesale legislative change following the Jackson Review in England. On balance, MASS would wish to avoid the very real problems of increased satellite costs litigation and so would not advocate a change in recoverability of ATE premiums and client success fees in Scotland at the present time. CHAPTER 9: DAMAGES BASED AGREEMENTS ( CONTINGENCY FUNDING ) 42. Should the law be changed to allow solicitors and counsel to enter into DBAs? 43. Should claims management companies continue to be entitled to enter into DBAs? victim from malpractice. 44. If DBAs are permitted in Scotland: Is it reasonable to expect successful pursuers to contribute some of their damages towards payment of their legal fees? Should there be a cap on the percentage of the damages that lawyers are entitled to charge? Should the percentage recoverable under a DBA be applicable to all heads of loss? Should there be an increase in the level of damages awarded? If so, by what percentage and how is this to be achieved?
13 What forms of protection may be required for clients entering into such an agreement? 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? 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? MASS is committed to representing the interests of innocent road traffic accident victims who have suffered injury and financial loss through no fault of their own. In some cases the loss may be modest but in many cases the injury can be severe causing loss of or restriction of earning ability. MASS regard DBA s as a further erosion of the long established principle that an innocent party should be placed back in the position they would have been but for the accident. The legal system should protect the most vulnerable in society but DBAs would potentially have a serious impact on the damages recovered by those most seriously injured. MASS would reiterate its position that DBAs are not in the best interests of road accident victims whether the agreement is with a firm of solicitors or a claims management company. Claims management companies operating in Scotland are wholly unregulated, unlike their English and Welsh counterparts. If CMC s are to continue to be entitled to enter DBAs then a regulatory or licensing regime requires to be instigated to protect the accident victim. Safeguards should be put in place to provide consumer protection by driving malpractice out of the claims management industry and introducing a robust complaints handling process. The Ministry of Justice in England and Wales regulate and license CMC's and have an appointed Head of Claims Management Regulator. The Civil Justice Council when constituted could fulfil such a function in Scotland. As set out, MASS disagrees with the implementation of DBAs but if they are introduced the maximum fee deductible from damages should be capped at 25% of damages excluding any damages referable to future care or any other future losses. MASS are of the view there should be no such prevention of solicitors being shareholders and directors in claims management companies, subject to the regulation detailed above. Such prevention would be anti-competitive. CHAPTER 10: THIRD PARTY FUNDING 47. What are the risks/potential abuses involved in third party funding and how might these be addressed? 48. If regulation is desirable, what form(s) should it take?
14 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? We do not consider that third Party funding arrangements are of major significance to MASS as a means of road traffic accident victims securing access to justice. Clearly where arrangements do exist, we share the concerns of the Review that risks and abuses are minimised or eliminated by proper regulation of third party funders. We would not consider it necessary or desirable for an injured party proceeding with a claim supported by a third party funder to have to disclose details of that arrangement to a defender or their agents. CHAPTER 11: ALTERNATIVE SOURCES OF FUNDING 50. Is a disproportionate amount of the civil legal aid budget allocated to family actions and, on any view, are there ways in which this might be reduced? 51. Should a CLAF or SLAS be introduced in Scotland? If so, which is preferable? 52. If such schemes were to be introduced, what types of litigation should be covered? 53. If such schemes were to be introduced, what should be the minimum and maximum disposable income of successful applicants? 54. Should such schemes be liable for payment of the expenses of successful opponents? 55. What further steps, if any, should be taken to promote pro bono funding of litigation and by whom? 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? MASS has no comment to make as we see no relevance of the above to road traffic related cases. CHAPTER 12: SCOTLAND S LITIGATION MARKET 57. What steps could be taken to make Scotland the forum of choice for litigation? 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?
15 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? 60. If damages based agreements are introduced in England and Wales but not in Scotland, would this create an incentive to litigate in England and Wales? In the context of road traffic related civil litigation, MASS would observe that there are already significant differences in law and procedure between Scotland and England and Wales at present (e.g. availability of jury trials; differing assessment of fatal awards) but there would not appear to be any evidence of forum shopping being a live issue. There is a reasonable chance that clients will forum shop. It is not so much the individual clients who forum shop but more the business to business referrers. If, for example, a liability insurer enters into a contract with an English law firm which has the capability of running Scottish cases and there is one way cost shifting in place in England then it seems more likely that business to business referrers will wish to do business with an English firm which could offer one way cost shifting as opposed to a Scottish firm which cannot. Founding jurisdiction in England will not be an issue in many Scottish cases. MASS would reiterate our position made already in this response paper that recoverable judicial costs should more closely reflect actual costs incurred. CHAPTER 13: SPECIAL CASES AND CONCLUDING REMARKS 61. Do clinical negligence claimants face particular difficulties in the funding of claims? If so, what measures might be taken to address these difficulties? 62. In the event that DBAs are not otherwise recommended, should they be available for the funding of multi-party actions? 63. If DBAs are not recommended for multi-party actions, how else may lawyers be remunerated for the additional responsibility involved in such actions? 64. Should the funding arrangements for multi-party actions cover the payment of legal representation and disbursements? 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? 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? 67. Can you suggest any means, other than those raised in this consultation paper, which would enable litigation to be more affordable? 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? MASS has no comment to make.