Success fee agreements: analysis of consultation responses

Question 2: This paper outlines reasons why it may be necessary to prohibit the use of success fee agreements in relation to family proceedings but possibly other kinds of proceedings as well. In order to assist in the drafting of regulations in this regard: we ask three questions.

a. In connection with what types of family proceedings are speculative fee agreements used?

b. What types of speculative fee agreements are presently used in family proceedings?

c. Are there any other kind of proceedings which are not appropriate for the use of success fee agreements and particularly damages based agreements, apart from family proceedings?

20. Few of the respondents provided an answer to the various elements in question 2. Only the Faculty of Advocates (“the Faculty”) answered question 2a. It noted that “speculative fee arrangements are used in a small number of cases with very particular circumstances, but where they are used they are used to good effect”. The cases concerned involve “financial provision on divorce, and more particularly where one party has the financial resources to litigate and the other does not”. The Faculty proposed that speculative fee arrangements should remain available to litigants in family law proceedings concerning financial provision on divorce. However, it considered that damages based agreements were not suitable for such cases.

21. Despite not answering the question, there was comment on 2a from three other respondents. These, including the Law Society of Scotland and Digby Brown, stated that they were unaware of speculative fee agreements being used in family proceedings. In addition, Digby Brown did not think it appropriate for family proceedings to be subject to success fee arrangements as “the dynamics of family proceedings are at odds with the nature of such agreements”.

22. None of the respondents answered question 2b.

23. Seven respondents provided an answer to question 2c:

• Three respondents, including the Forum of Insurance Lawyers (“FOIL”) and the ABI, considered that success fee agreements were inappropriate when the pursuer does not have legal capacity.
• Four respondents also thought success fee agreements inappropriate where liability has been admitted in full pre-litigation. The reasoning given by FOIL was that where liability is not in dispute, “the amount of work for the pursuer’s agent to carry out is considerably less. Separately though crucially, where liability is not in dispute, the risk of the pursuer’s claim not being successful and, consequently, the risk to the pursuer’s agents of not recovering fees, are massively reduced”.
• Alan Paterson suggested that success fee agreements were not appropriate “where the primary object of the litigation is to get a ruling on a point of law from the court”.
• The Glasgow Bar Association (“GBA”) considered that damages-based agreements are not appropriate for any claims where the main objective is to get a non-monetary remedy and where it is extremely difficult to quantify the value of success, e.g., cases for interdict, non-harassment orders, lawburrows, or powers of arrest. It also thought that actions seeking orders ad factum praestandum, multiplepoinding, or eviction are probably unsuited to success fee agreements, together with any action seeking anything other than payment.
• Quantum Claims queried the Scottish Government’s view that damages based agreements were unsuitable for family proceedings.

24. In summary, question 2 attracted relatively little interest. Only the Faculty provided information on speculative fee agreements and family proceedings. There was slightly more interest in other kind of proceedings which are not appropriate for the use of success fee agreements and particularly damages based agreements. Those representing defenders suggested that success fee agreements were not appropriate when the pursuer does not have legal capacity or where liability has been admitted in full pre-litigation. Two respondents were concerned about success fee agreements being used where the success of an action was not about an award of damages. Finally, the one claims management respondent appeared to consider that damages based agreements were suitable for family proceedings.