Success fee agreements: analysis of consultation responses

Question 1: Please indicate if you are content with the success fee caps recommended by Sheriff Principal Taylor.

10. Sheriff Principal Taylor recommended the following caps on success fees.

11. Fourteen respondents indicated that they were content^[1] with Sheriff Principal Taylor’s recommendation and ten were not content. The Law Society of Scotland and the Faculty of Advocates were amongst those who were content.

12. The Association of Personal Injury Lawyers (“APIL”) and Digby Brown, which were both content with Sheriff Principal Taylor’s recommendations on caps in civil cases, suggested that the caps should be extended to match Criminal Injuries Compensation Authority (“CICA”) cases with the cap set at 35%.

13. Professor Alan Paterson, who served on the advisory panel to Sheriff Principal Taylor’s Review, was content with the recommendations which he stated “were the outcome of long and detailed debates leading to a fully considered compromise and accordingly that his proposals were to be taken as a package. It follows that Taylor's proposals on caps were not meant to be minima as well as maxima. As his report indicates, Taylor expected competition, shopping around etc. to be encouraged to prevent the caps becoming the de facto norm”.

14. Digby Brown, who were also content commented: “It is important to remember that the recommendations made by [Sheriff Principal Taylor], after a comprehensive review process, were a package of measures designed primarily to increase access to justice. A number of the recommendations interlock and it is necessary to view them in that light. We would also confirm, from our own experience, that clients are very happy with the simplicity and certainty provided by damages based agreements. It is our view that these have enhanced access to justice, and the balance of factors set out by Sheriff Principal Taylor is entirely apposite.”

15. Some of those who were not content also commented on the issue of the caps becoming the norm rather than the maximum. For example, the Association of British Insurers ("ABI”) stated: “Unfortunately charging the maximum percentage allowed will become the norm as the public are unlikely to understand the available funding options and Providers are unlikely to compete. Sheriff Principal Taylor’s assumption that the public will become increasingly aware of different funding mechanisms relies upon the public being familiar with and engaged in the sector. Most pursuers will not be familiar with the various funding mechanisms as it will be their first, and maybe only, exposure to civil litigation and will be dependent upon the provider to explain the options.” Others considered that the caps were rather high as solicitors in successful cases subject to success fee agreements will recover base costs, the percentage agreed with the pursuer in the agreement, and in some cases, an additional fee awarded by the court on application in difficult and complex cases.

16. The Forum of Scottish Claims Managers (“FSCM”) argued that “summary cause and ordinary cause scale fees (which apply when a case litigates) do not reflect proportionality, discourage early settlement and encourage duplication of work by incentivising the amount of work done on a case. Success fees on top of these current fee scales will only widen the gulf of disproportionality on lower value cases, in particular cases brought in the All-Scotland Personal Injury Sheriff Court”.

17. Various suggestions were made as to different caps. Two respondents, including the ABI, made the following suggestion in relation to personal injury cases:

• Up to 10% of the first £100,000 of damages
• Up to 5% for the next £400,000
• Up to 0.5% of damages over £500,000

Kennedy’s proposal was:

• Up to 20% of the first £50,000 of damages
• Up to 10% for the next £100,000
• Up to 2.5% of damages over £150,000

18. The only respondent suggesting higher caps was responding on behalf of a claims management company. Quantum Claims’ proposition was that there should be a flat rate of 20% plus VAT for personal injury claims, “with no variation on the level of damages or class of damages it applies to”, together with 35% plus VAT for both employment and personal cases.

19. The general trend was that pursuer groups were content with the caps recommended in the Review and that defender groups considered that the suggested caps were too high.