Expenses and Funding of Civil Litigation Bill Consultation Response by GCC

Transcription

1 Expenses and Funding of Civil Litigation Bill Consultation Response by GCC (A) Speculative Fee Agreements: Q1: Do you think that a lack of cap on speculative fee agreements prevents potential pursuers of actions from obtaining access to justice? Yes or no. Please give reasons for your answers. Glasgow City Council as a Local Authority do not have knowledge or experience of how Speculative Fee Agreements currently operate. However if there is uncertainty on the level of fees to be paid to agents in the event of success that may deter some potential Pursuers from proceeding with claims. Q2(i): What impact would the introduction of a cap on speculative fee agreements have on Pursuers of actions, and why, and what would they look like? It can be assumed that the proposed cap on speculative fee agreements is likely to encourage more claims, from claimants who are attracted by the certainty on fees charged if they win. Currently as noted by Sheriff Taylor increasing numbers of actions, particularly personal injury actions are funded under speculative fee arrangements. It can only be anticipated that if these are made more attractive by means of a limit on expenses to be paid in the event of success that this increase will be accelerated. Q2(ii) What impact would the introduction of a cap on speculative fee agreements have on Defenders of actions and why, and what would they look like? It is likely that, coupled with the other consultation proposals, Defenders will be faced with an increase in claims. Given the mitigation of risks to Pursuers and the financial incentive for Pursuer s agents to maximise judicial expenses recovery ( given the proposals for judicial fees recovered to be retained by agents in addition to the fee charged) it is also likely that litigation will increase and that later & higher settlements will occur. A cap on speculative fee agreements may have the effect of further incentivising the recovery of judicial expenses to fund the litigation. Q2(iii) What impact would the introduction of a cap on speculative fee agreements have on you or your organisation and why, and what would they look like? The proposed cap on speculative fee agreements is likely to lead to more actions being raised, not less. While this may be the purpose of the proposals, an increase in litigation will nevertheless have an impact on Defenders resources in terms of manpower required to process the claims, and financially. Q3: Which group of individuals/organisations are likely to benefit most? Please explain how these benefits will accrue, and their likely extent if possible. Pursuers with income levels above those of eligibility for legal aid for the reasons set out in 2(i) above. Large Pursuers firms with established no win no fee practices who would look to increase business. Q4: Which group of individuals are likely to be most disadvantaged? Please explain how these disadvantages will accrue, and their likely extent if possible. Defenders in general whether faced with increased insurance premiums or increased direct liabilities. It is impossible to quantify the extent of the increase. Q5: What measures could be considered to both identify and mitigate against disadvantages? Pre action protocols and court rules to promote early settlement and avoid the maximisation in generation of judicial expenses. In particular mandatory disclosure of the Pursuer s liability witnesses, medical evidence, wage loss details etc to allow Defenders to assess and value claims pre litigation.

2 (B) Damages Based Agreements: Q6: Do you think that the inability of solicitors in Scotland to enter into damages based agreements with their client prevents potential pursuers of actions from obtaining access to justice? Yes or no. GCC have no direct experience but it appears likely that the addition of a further funding option for potential pursuers with restricted liability in the event of lack of success will increase the numbers willing to progress claims. Q7: What is the likely impact on you or your business of allowing damages based agreements to be enforceable by solicitors in Scotland? See answer 2(iii). Giving an additional option for the funding of litigation with limitation on liability for expenses can only be likely to increase claims and litigation. In addition Pursuers agents under damages based agreements have a significant financial interest in both maximising settlement figures and in maximising the judicial expenses to be recovered from Defenders. In these circumstances it would seem that higher and later settlements may well occur as a result of the proposals. Q8: Do you think that a lack of cap on damages based agreements prevents potential pursuers of actions from obtaining access to justice? Yes or no. Please give reasons for your answers. Q9(i): What impact would the introduction of a cap on damages based agreements have on Pursuers of actions and why, and what would they look like? As with the proposed cap on speculative fee agreements, it is anticipated that the proposed cap on damages based agreements may well encourage more claims, both from claimants who are attracted by lower fees charged if the win, and by Solicitors who may look to raise more actions to benefit financially. Q9(ii): What impact would the introduction of a cap on damages based agreements have on Defenders of actions and why, and what would they look like? See Answer to Q2(ii). Q9(iii): What impact would the introduction of a cap on damages based agreements have on you or your organisation and why, and what would they look like? As with the proposals in respect of Speculative Fee Agreements, it is likely that these proposals will lead to more actions being raised, not less. While this may be the purpose of the proposals, an increase in litigation will nevertheless have an impact on Defenders resources in terms of manpower required to process the claims, and financially. Q10: Which group of individuals/organisations are likely to benefit most? Please explain how these benefits will accrue, and their likely extent if possible. Pursuers with incomes above the eligibility threshold for Legal Aid and potentially Pursuers agents who would attract increased business. Q11: Which group of individuals are likely to be most disadvantaged? Please explain how these disadvantages will accrue, and their likely extent if possible See Answer to Q4. Q12: What measures could be considered to both identify and mitigate against disadvantages? See Answer to Q5.

3 Q13 What impact would these proposals have on excessive charging under damages based agreements? A cap on damages based agreements would obviously restrict excessive charging of Pursuers. However the effect may well be to increase the pressure on Pursuer agents to maximise income by way of seeking to increase recovery of judicial expenses from Defenders. Q14. Do you agree that the proposed statutory controls should apply to anyone offering a damages based agreement? Yes or no Yes. To ensure level playing field, to maintain appropriate professional standards and to avoid malpractice. Q15: What should the sanction be for non-compliance with the statutory controls? Q16: If any of the provisions of the rules are breached then should the agreement become voidable? Yes or no. Please give reasons for your answer. Q17: Do you agree that the future loss from the success fee should not be ringfenced? Yes or no. Q18(i): What impact would not ring-fencing future loss have on Pursuers of actions and why, and what would they look like? Q18(ii): What impact would not ring-fencing future loss have on Defenders of actions and why, and what would they look like? Q18(iii): What impact would not ring-fencing future loss have on You or your organisation and why, and what would they look like? Q18(iv): What impact would not ring-fencing future loss have on Other organisations and why, and what would they look like? Q19: Do you agree that a new code of good practice, applying to all persons and businesses offering damages based agreements, should be developed? Yes or no. Please give reasons for your answer Q20: Should a new code of good practice be statutory or non-statutory? Please give reasons for your answer Q21: Should the development of a new code of good practice be sector-led? Please give reasons for your answer.

4 (c) Qualified One Way Cost Shifting Q22 Minimising potential liabilities for unsuccessful claimants will be likely to significantly increase access to litigation. Q23(i): What impact would the introduction of a system of qualified one-way costs shifting have on Pursuers of actions and why, and what would they look like? The proposals are likely to increase claims and actions by Pursuers who would previously have avoided litigation due to the prospect of the potential cost if they lose. While greater access to justice may be achieved, there is the danger that some pursuers will be encouraged to raise actions where there is little or no chance of success as they will have little or no fear of being responsible for the Defenders expenses. Pursuers agents will seek higher settlements in more marginal cases due to the accepted high costs of litigation with Defenders having little or no prospect of recovery. The negotiating balance would be weighted heavily in favour of Pursuers. Q23(ii): What impact would the introduction of a system of qualified one-way costs shifting have on Defenders of actions and why, and what would they look like? It is anticipated that the proposals would create a disincentive on the part of the pursuer to settle a claim pre-litigation, or pre-proof once an action has been raised, as there would be minimal expenses risk and significant benefits in progressing litigation as far as possible. This would lead to defenders having increased liabilities and more litigation to service. Even where the defender is an insurer, overall costs are likely to rise for most defenders as a result of insurers passing on costs by way of increased premiums. Defenders will be more likely to settle actions where they would not have done so previously, and at a higher level than previously, as the cost of the expenses incurred in litigating would be greater than the amount to be paid to a pursuer, even where the defenders are of the view there is no prospect of success. The incentive for the pursuer to prolong litigation with no sanction coupled with the economic incentive for the defender to settle early unfairly shifts the balance of negotiating power towards the pursuer. This is likely to lead to higher value (although not necessarily fairer) settlements solely due to the economic consequence of these proposals. This position will be exacerbated by the proposals in regard to tenders. The accepted effect of tenders in promoting early & efficient settlement will be diluted. Defenders will be faced with escalating litigation expenses and the majority of these will be irrecoverable even if a Tender is not beaten. In light of this Pursuers will press for and Defenders will be compelled due to economic pressures to make excessive settlements particularly in low value cases where expenses greatly outweigh the sums sued for. Q23(iii): What impact would the introduction of a system of qualified one-way costs shifting have on your organisation and why, and what would they look like? The response to question 23(ii) applies equally here, however, while insurance companies are able to pass on additional costs to their customers, other defenders eg, local authorities, are unable to do the same, and will have to bear any additional costs directly and at a time when public sector spending is being cut. It is suggested at paragraph 85 of the consultation that the majority of defenders are advantaged by insurance company backing. This is not the case for Glasgow City Council in the majority of cases and so any increase in overall costs will be bourn directly by the Council. Q24: Which group of individuals/organisations are likely to benefit most? Please explain how these benefits will accrue, and their likely extent if possible. The benefits would be mainly to pursuers with income/savings in excess of legal aid limits, and pursuers agents.

5 Q25: Which group of individuals are likely to be most disadvantaged? Please explain how these disadvantages will accrue, and their likely extent if possible The adverse effects would be felt most keenly by public authorities, whose resources are already limited and to be subject to further cuts and those individuals not backed by an insurance company. Q26: What measures could be considered to both identify and mitigate against disadvantages? Early intervention by a Sheriff is essential if qualified one-way cost shifting is to go ahead so that cases with little merit are identified and dealt with at an early stage. A means of mitigating the impact would be to make one way qualified cost shifting at the discretion of the court at the outset. The pursuer would require to satisfy the court at a hearing that there is a prima facie case and that the order for one way cost shifting is reasonable in all the circumstances of the case, which would include the resources of the defender. The defender would be entitled to make representations at the hearing. The requirements of early disclosure set out in Answer 5 could also to some extent litigate the effects. Q27: Do you agree that the test for losing the benefit of qualified one-way costs shifting should be fraud, abuse of process and in cases of Wednesbury unreasonable behaviour? Yes or no. Please give reasons for your answer. No. The proposed test for losing qualified one-way cost shifting for unreasonable behaviour sets the bar extremely high for defenders to have any realistic prospect of recovering expenses except in the most extreme circumstances. It does not offer Defenders sufficient protection from spurious claims with no reasonable prospects of success. As a result there is concern that Defenders will be faced with more weak cases and an economic imperative to settle these. If qualified one way cost shifting is to be adopted there should be greater clarity on the threshold of conduct to lose the protection of qualified one way cost shifting. It is also surprising that the bar for loss of qualified one way shifting is higher than the comparable test in legal aid cases where the test for refusal of modification of liability for expenses is simply one of reasonableness.. (d) Damages based agreements, speculative fee agreements and qualified one way costs shifting overall impact of package Q28: What is your view on the argument that the reform package removes all risk to pursuers of actions? The totality of the proposals is to remove all the financial risks of litigation from Pursuers with the sole exception of circumstances of Wednesbury unreasonable behaviour. The burden of risk will be transferred predominantly to Defenders and to a more limited extent to Pursuers agents. Q29: What is likely to be the overall impact of the package on you or your business? Please quantify, if possible. See Answers 23(ii) & (iii). It is impossible to quantify. Q30: What do you think the impact of the overall package will be on: a) The general level of claims? Will increase b) The general level of litigation? Will increase c) The trajectory of claims, and settlement rates? It would seem that there will be less financial incentive to resolve at the claims stage, there will consequently be more litigation & claims will settle at a higher level.

6 d) Pursuers of actions? It is suggested within the Consultation that speculative fee agreements and damages based agreements will act as a disincentive to bringing unmeritorious cases. This appears doubtful. There are already a number of successful firms who operate in the personal injury arena on the basis of speculative fee arrangements. The business models deployed by these firms rely on judicial expense generation to fund their operation. The proposals would seem to enhance the prospects for these practices to be continued with greater expense generation and less protection for Defenders. Whether or not and to what extent this is correct, the inhibiting effect of these agreements can only be in respect of an action brought by an agent acting for a pursuer. The same cannot be said in respect of a party litigant who will not be subject to the same financial considerations as the agent acting for a pursuer. e) Defenders of actions? See above f) Pursuers solicitors? See above g) Defenders solicitors? See above h) Insurance companies? Increased premiums. i) Case management companies? j) The courts? Potential increased workload. k) Scottish Legal Aid Board? l) The general public? Potential to increase the willingness to advance and pursue claims even if they are weak. m) Others? Will impact on the finances and resources of Local Authorities and other public bodies. Q31: Do you agree that there should be a table of fees introduced for counsel in the Court of Session? Yes for standard routine work. It will allow certainty of costs and ensure uniformity. For non-standard work however Counsel should be entitled to charge as agreed with the agent/client on the basis of experience/knowledge & level of work carried out. Q32: Do you agree that there should be a table of fees introduces for counsel in the sheriff court for those cases where sanction for counsel has been granted? As per Answer 31.Additionally to prescribe rates for all work in the sheriff Court may have the effect of restricting the choice of Counsel in that forum. Q33: Do you agree that solicitor advocates should be included in this table of fees? Yes or no. Please give reasons for your answer. Q34: Do you agree that the Scottish Civil Justice Council is best placed to develop and maintain the table of fees? Yes or no. Please give reasons for your answer Q35: What do you think the impact of introducing a table of fees will be on: a) Pursuers? b) Defenders? c) Solicitors? d) Solicitor advocates? e) Counsel? f) Scottish Legal Aid Board? g) Others? a), b) & c) It would allow certainty in regard to routine fee charges by Counsel. Q36-46 GCC do not have sufficient experience of or knowledge of the background to multi party actions to comment at present. GCC however would agree with the Scottish Government s position that court procedures should only be used after more appropriate means eg statutory appeals, codes of practice have been utilised.

7 Auditors of the Court Q47: What impact will the proposal to make the post of the Auditor of the Court of Session a salaried public appointment have on: a) The Auditor of the Court of Session? b) Staff of the Auditor of the Court of Session? c) Pursuers of actions? d) Defenders of actions? e) Solicitors? f) Counsel? g) Scottish Legal Aid Board? h) Other? Q48: 48. What impact would the proposal to make the post of auditor in the sheriff court a salaried public appointment have on: a) Sheriff court auditors? b) Independent practitioners who currently hold commissions as auditors? c) Pursuers of actions? d) Defenders of actions? e) Solicitors? f) Counsel? g) Scottish Legal Aid Board? h) Other? Courts power in respect of Conduct of Legal Representatives Q49: Do you support the proposal to make legal representatives personally liable for expenses occasioned by their own conduct? Q50: What impacts do you think that the proposal to make legal representatives personally liable for expenses occasioned by their own conduct will have on you or your organisation? Legal Aid Provisions: Legal Aid for Legal Persons Q51: Do you agree that these legal aid for legal persons provisions should be taken forward? Yes or no. Please give reasons for your answer. Q52: Do you agree that the Scottish Legal Aid Board should be required to apply the financial eligibility tests set out in paragraph 187 above? Yes or no. Please give reasons for your answer Legal Aid Provisions: Funder as a Last Resort Q53: Do you agree that the Legal Aid Fund should only be used as a funder of last resort in respect of civil litigation? Yes or no. Please give reasons for your answer.

8 CHAPTER 4: Assessing Impact: Equality