Damages based agreements must be fully regulated: Faculty
Introducing US-style damages based agreements (DBAs) to Scotland has “the potential to enhance justice”, but must be properly regulated, according to the Faculty of Advocates.
In its response, published today, to the Scottish Government's consultation paper on the Expenses and Funding of Civil Litigation (Scotland) Bill, Faculty voices concern at the Scottish Government’s decision not to regulate claims management companies, which DBAs may attract to the Scottish market.
DBAs allow a lawyer’s fee to be calculated as a percentage of the client’s damages if the case is won.
Advocates are currently prohibited from entering into such arrangements by the Faculty’s Guide to Professional Conduct, which reflects the Code of Conduct for European Lawyers in attempting to discourage speculative litigation with its potential for abuse.
Faculty states that there is "no reason to believe that solicitors and advocates, who are already regulated by the Law Society and the Faculty of Advocates, would abuse these agreements". It suggests that the bill should simply abolish any rule of law against DBAs, leaving it to Faculty, with the approval of the Lord President, to decide whether to alter its Guide in this respect.
It adds that its Professional Standards Committee has been asked to consider whether the Guide should be changed, assuming that this is permitted under the Act.
“On the basis that there is a public interest in the proper regulation of DBAs, if they are to be permitted, it is a matter of concern that the Scottish Government does not propose to regulate claims management companies”, Faculty comments.
Among other points in its submission, Faculty does not oppose legislation giving the Scottish Civil Justice Council power to develop a table of recoverable fees for counsel, but observes that a table is liable to promote rigidity rather than flexibility in fees.
“There is a risk that the specified recoverable rates may become, in practice, the minimum rate. Equally, if the table is not kept regularly under review, there is a risk that the fees which counsel may reasonably command in the market come to exceed those allowed under the table. This would undermine the aim of full cost recovery", the response states.
“It may be that alternative mechanisms can be devised which could secure transparency and control but without the rigidity of a table of fees.”
Faculty also states that a proposal to make legal representatives personally liable for expenses caused by their own fault or an abuse of process needs to be framed so that lawyers pursuing unpopular and seemingly unmeritorious cases in the interests of access to justice, are not be deterred from doing so by the risk of personal liability.
“Experience under the Human Rights Act has shown that some of the most significant changes in the law in recent times have come about because certain lawyers have been willing to persist in unpopular arguments even in the face of initially adverse rulings from courts", Faculty comments.