Proposed reforms to the funding of civil litigation claims in Scotland have been backed by MSPs on Holyrood’s Justice Committee – subject to ongoing review of how the law actually works in practice.

While unanimously supporting the general principles of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill in its stage 1 report, the committee also urges the Scottish Government not to bring the new law into force until claims management firms in Scotland are regulated – an area, it says, which the Scottish Government "has already moved on following correspondence from the Justice Committee". Scottish ministers are seeking to amend a UK Parliament bill to extend regulation of claims management companies to Scotland.

The bill proposes various measures to reduce the cost and risk of goping to court especially for people with personal injury claims, including regulation of "no win, no fee" agreements, and removing the liabiilty for the cost of unsuccessful claims except for reasons related to the conduct of the litigation. Additionally, it allows group proceedings to be brought in Scotland for the first time.

The committee particularly wants ministers to reassess concerns that the changes may lead to a rise in fraudulent claims or a compensation culture. It also wants to see changes to the bill in order to provide more safeguards for people when a solicitor takes on their case through a no win, no fee arrangement – and that the Scottish Government consider further how the provisions would apply where there is no "David and Goliath" relationship between the pursuer and defender.

Among other main points in the report:

  • On balance, having heard conflicting evidence, the committee is persuaded that there is an access to justice problem in Scotland.
  • If damages-based agreements are to be enforceable by solicitors, the committee considers it important that appropriate safeguards, such as independent advice, are in place to protect pursuers and guard against potential conflicts of interests for solicitors. It welcomes the establishment of a working group at the Law Society of Scotland to consider these issues.
  • The committee seeks confirmation from the Scottish Government as to whether regulations would ensure that caps would apply to the cumulative total of the success fee, so that pursuers never have to pay more than one such fee.
  • The committee is concerned about the provisions in the bill which would allow damages for future loss to be included when calculating a solicitor's success fee. The committee heard that this approach could lead to a reduction in damages available to the pursuer to pay for future care and medical support.
  • The committee considers that there is a need to reform the existing rules on additional fees, particularly in light of the provision in s 3 of the bill which would allow a solicitor to retain both judicial expenses and any success fee.
  • The committee welcomes the Scottish Government’s commitment to address the concerns it has heard about the current drafting of s 10. It is important that the bill provides a more specific and accurate definition of the third party funders that will be potentially liable for an award of expenses. Further, the Bill should explicitly provide that such funders do not include (i) trade unions and staff associations, and (ii) solicitors acting under a success fee agreement.

Committee convener Margaret Mitchell MSP commented: "This bill will directly affect the rights of many thousands of people in Scotland, and seeks to remove some of the barriers which have prevented individuals accessing civil justice.

"Finding redress through the courts is a fundamental aspect of the justice system. The Justice Committee’s scrutiny of this legislation will help to ensure that process is as straightforward and free from pitfalls as possible."

She added: "The committee welcomes the open approach the Scottish Government has taken during stage 1 scrutiny of the bill to address outside concerns. In supporting the general principles of the bill, the committee has made a number of detailed recommendations in its stage 1 report suggesting ways in which the bill should be improved. The committee hopes the Scottish Government will be open minded to these recommendations as well."

Click here to view the committee's report.