March 25, 2020

Scotland: Justice Committee considers success fee Regulations

Following the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act receiving Royal Assent in 2018, the Justice Committee recently considered the draft Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 (Success Fee Agreements) Regulations 2020 and recommended they be approved. The Regulations will come into force on 27 April 2020.

The draft legislation can be accessed here.

The purpose of the Regulations is to:

  • Regulate success fee agreements in Scotland

The term "success fee agreements" includes speculative fee agreements and damages based agreements. The success fee will be a percentage of the damages awarded or agreed and will be paid where the plaintiff is successful. When unsuccessful there will be no fee, or a lower fee, payable. “No win, lower fee” agreements will not apply to personal injury cases.

  • Cap success fees

Capping success fees will provide greater certainty to plaintiffs entering into success fee agreements and help them to find the best value representation to meet their needs.

Regulation 2 sets the following caps on success fees:

Type of case Cap (all caps include VAT)
Personal injury cases

Up to 20% of the first £100,000 of damages

Up to 10% for the next £400,000

Up to 2.5% of damages over £500,000

Employment tribunal cases Up to 35% of the monetary award recovered
Commercial and all other actions Up to 50% of the monetary award recovered

It is stressed that these caps should be seen as the maxima and not the “going rate”.

  • Provide that some kinds of success fee agreements will not be available for family proceedings

As in England and Wales damages based agreements will not be available in family proceedings in Scotland. It is noted that it is much more difficult to define success in these cases as the court may be required to make a range of different orders. Regulation 3 therefore excludes the use of damages based agreements from family proceedings.

The Official Report of the Committee’s meeting can be accessed here.