Scotland to pave the way for viable DBAs?

Scottish lawyers say they may be on the verge of solving a civil litigation funding headache that has dogged counterparts south of the border.

The Scottish government has advanced its Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill, which seeks to allow damages based agreements entered into by solicitors in the jurisdiction to be enforceable for the first time.

DBAs, which allow lawyers to conduct litigation in return for a share of any damages, have been permitted since 2013 in England and Wales but are rarely used, as concerns remain about the drafting of regulations and the viability of running high-value cases.

In Scotland, current proposals are for success fees to include the value of damages for future losses, subject to a sliding cap. Safeguards include ringfencing periodical payments and limiting success fees in cases valued at more than £500,000 to 2.5%.

It is proposed that those who provide legal services under a success fee agreement will be able to retain expenses which are recovered, in addition to the success fee, unless the agreement provides otherwise.

Edinburgh solicitor Gordon Dalyell, vice-president of the Association of Personal Injury Lawyers, says firms in England and Wales will be looking to the Scottish model to see if it can be adapted. Dalyell said that the bespoke DBA regulations should encourage more firms to take on meritorious cases where the volume of work – and so the potential for losing income – is greater.

‘We know from the experience of colleagues in England and Wales, where future losses have been ring-fenced from payment of success fees, that such limiting of the amount of costs recoverable makes, in some cases, the financial reward for the work done so low as to be unviable,’ he said.

The Civil Litigation Bill is set to enter stage two later this month and could be passed and implemented by the end of this year.

The legislation largely takes on the recommendations of Sheriff Princi-pal Taylor’s review, which found the potential costs in civil court claims had deterred many people from pur-suing legal action.

While pursuers – claimant lawyers – largely welcome the plans, the Asso-ciation of British Insurers has warned the reforms make it more attractive to run claims to proof rather than agree an early settlement.