I cannot mandate the SCJC timescale. As I said, the first meeting to consider the issue will be later this month. The whole of the Scottish Civil Justice Council rules procedure is being done as expeditiously as possible. Lord Gill has absolutely no reason to want the rule changes to be brought in slowly, so my expectation is that the issue will be dealt with as soon as possible.
I think that we are committed to introducing a statutory instrument next year on fees for counsel. I ask Stella Smith whether that is correct.
For clarification, Taylor was keen to emphasise that you have to see qualified one-way costs shifting in the context of the Gill reforms as a whole. That relates to, for example, the power to strike out unmeritorious claims in case management.
We have also said in our response that we shall be considering what exceptions should be made to one-way costs shifting, such as, for example, where there is fraud on the part of the pursuer.
I think that you have just won friends by not giving us another piece of legislation to consider.
No. I cannot answer that question categorically. My best guess is that it would be legislation for the final year. It is difficult to see it being dealt with in the next parliamentary year, but we have two full parliamentary years to go.
10:15
So, would the same apply in dealing with an increase in instances of pursuers deciding that they have nothing to lose, that they will get their expenses paid and—
I am not sure that any research has been done on that. I am conscious from my experience in the courts that you might avoid some sheriffs for certain things if you can manage it. That might be what is happening in this case, but it would be an absolutely normal part of the process that would not change because of anything that we did. As long as sheriffs have discretion, we will sometimes get such cases.
I would like to ask about referral fees. They are banned in England and we are told that that is because they are not considered to be in the interest of consumers. Have you any concerns that the interests of consumers in Scotland will be adversely affected by the fact that there are no similar arrangements in Scotland?
That is helpful. On the same subject, the cap could relate to market forces; if market forces are not seen to operate in an acceptable manner, the Government might intervene. Will you clarify how that would work?
No—the instrument will be on advocates’ fees, which is a slightly different issue.
Taylor has not recommended that referral fees be banned, but we will look at the options that would protect consumers around things like cold calling and having a voluntary code. We are cautious about referral fees. It is not about banning them outright but about looking at how to put in place protections that would prevent the excesses that might have come about.
It is terribly complicated for ordinary people let alone the committee to understand the ins and outs of all the ways in which expenses will be calculated. At the end of the day, how are ordinary people—the defender or the pursuer—going to know what applies to them? Whose responsibility will it be to put that in simple language for them?
Are you asking about the intervention or the cap?
Fees for counsel will be left to the discretion of the Civil Justice Council. It might want to take evidence on that, because the situation is changing. Since the Taylor review, the dean of the Faculty of Advocates has made new rules under which counsel can appear without a solicitor. There are various changes that have to be taken into account.
You are asking me to make an estimate that I simply cannot make. I am sorry.
I expect all those issues to be raised in the consultation on the proposed legislation—which is now unlikely to happen until the final year of this session.
The Taylor review was published a year ago but only now are we getting the Scottish Government’s response. Had an earlier response been forthcoming, some of the recommendations could have been included in and implemented as part of the Courts Reform (Scotland) Bill. Why has it taken so long for the response to come?
How will that monitoring take place? Who will—
I think that we are all looking forward to the two years already.
I want to ask about issues in category 3: protective expenses orders, before-the-event insurance and multiparty actions. There seems to be less of a response on them. Is the Government considering introducing any of those in future legislation?
The intervention.
I imagine that it is the fundamental responsibility of a person’s legal adviser to give the best advice they can on how to proceed with the case. At the end of the day, is that not a job for the professional that an individual engages?
The report was published last September, which is not quite a year ago. The report is fairly significant and substantial. We have had considerable discussions about aspects of the report and our response reflects that fact. The discussions on how best to proceed are on-going. However, not all the recommendations fall to the Scottish Government to deliver and we had to accurately reflect that, too. In addition, some aspects needed to be clarified and agreed with others. Furthermore, before one makes any formal response, one must have an understanding of how others would be impacted by such a response. We will continue to work with partners across the justice system on all the recommendations.
The Taylor review came out of the Gill reforms, and we focused on ensuring the enactment of the Gill reforms because Taylor’s recommendations were all predicated on that having taken place. That is how we have been working on this.
I was not asking you to be as specific as that; I was just asking for a general comment on cultures. Do you think that the proposal would encourage a different culture?
The difficulty for the committee is that we are trying to get something out of this evidence session, to move beyond what we have on paper and to explore the issues. That response was helpful, however.
Let us move on to regulation of claims management companies. They are regulated in England and Wales, but the recommendation is not to do the same here. What is the rationale behind that?
To assist the committee, I point out that, as the minister mentioned in her opening statement, the Civil Justice Council’s costs and funding committee will consider sanction for counsel at its next meeting.
I am sorry; I cannot answer that question at this stage. We have to look at the options for how we might do that.
No. We consider that it is appropriate for the Scottish Civil Justice Council to use its existing powers in that area. At the moment, we are, in effect, giving ourselves a watching brief to see how things develop before we would come back and consider anything further.
The area is changing, and we want to ensure that the Civil Justice Council has an opportunity to look at it. We consider that that is best done by it, partly because it is fleeter of foot than we are. If we were going to introduce primary legislation on all those things, that would take time, and if we then tried to change that legislation, it would take more time. The Civil Justice Council can respond much more quickly.
There are a couple of reasons for that. First, there is not much in the way of reported malpractice, concerns or problems in Scotland at the moment; the issue has not been raised in a serious way. However, we must take into account some of the other changes that are being made outwith all this. The alternative business structures that we are currently negotiating with the Law Society of Scotland are not yet up and running, so we do not know what effect they will have on the market.
Some of what claims management companies do at the moment may no longer be required; once the changes are in place, we will have changed the field, and we do not know what effect that will have on the claims management sector. Also, the establishment of another regulator would cost money. We are still pursuing all the other changes in the process, and we do not think that putting in place a regulator is the right thing to do at the moment.
Some claims management companies are already de facto regulated, either because the solicitors who are involved in their work are subject to Law Society regulation, or because they are part of UK-based businesses, which are subject to the regulator in England and Wales. The question is whether it would be proportionate formally to regulate at this stage, or better to see how the field changes as a result of the overall package of changes.
We have not ruled out regulation of claims management companies, but we want to see the impact of all the other things that we are doing. That includes proposals that we have just been discussing, which will form part of the legislation that is proposed for towards the end of the parliamentary session. It is not that having a regulator is out of the game entirely, but if you are asking me to rank it in terms of time and priority, I would respond by saying that we do not view it as something that we wish to establish immediately.
Fine. It is just that it is so complicated, as people have all these things in front of them. At the moment it is quite difficult to explain to a client how expenses operate, and with the confection of options that we have here—this list—it is going to get even more complicated for them to understand the ramifications. I am not saying that the change should not happen—just that it is complicated.
That is helpful. The minister mentioned that it will not necessarily take a full year or year and a half to deal with the issue—it could be done sooner.
When was the decision taken not to implement the Taylor recommendations in the Courts Reform (Scotland) Bill?
The Taylor review discovered that there was a difficulty about the fact that, in general terms, people either have to be poor enough that they qualify for legal aid or so rich that the costs do not matter. As that leaves a majority of people in the middle feeling pretty much shut out from legal action, we are trying to bring together a range of measures that will encourage more people to feel that they have access to the civil courts. A lot of people at the moment feel that they do not have access to the civil courts. The point is that the changes will be brought into being across a suite of legislative proposals and rule changes. The Gill review is part and parcel of that process, as is the Taylor review and any primary legislation that might follow on from that. The issue concerns the entire package of making justice work.
We intend to introduce a cap, and it will not be possible to deduct from damages a greater sum than the cap. In our response, we agreed with Sheriff Principal Taylor’s observation that, routinely, a figure that is less than the cap might in practice be deducted, because of competition between lawyers. We accept that market forces are involved.
At this stage, we have no plans to intervene. In the longer term, if the cap looks as though it is beginning to distort the situation, it might be reconsidered. However, that is not our intention at the moment.
Indeed, but the Parliament will get the opportunity to scrutinise things that are done through primary legislation.
It is wise to remind ourselves that the Faculty of Advocates has already changed its rules to allow counsel to act in certain civil cases without an instructing solicitor. Some things have happened fairly recently, and things are moving quite quickly. In some respects, the Taylor review has already been overtaken by events.
That is part and parcel of why people employ a legal adviser. I do not think that there has ever been any way round that. In that sense, nothing will change. If someone is going to raise a legal action, their best course of action is to see a solicitor first. I am sure that all members here frequently advise people who come to their constituency offices that they need to take legal advice. I cannot move away from that point. If someone employs a lawyer, it is the lawyer’s job to advise their client as to the best course of action in the particular circumstances of their case.
We said in the response that we intend, as was suggested by Sheriff Principal Taylor, to introduce a cap on the amount of damages that can be deducted to satisfy a lawyer’s fee under a damages-based agreement. We said that we will take that forward in the package of legislation that the minister has mentioned.
Sheriff Principal Taylor said in passing that even if a cap is in place market forces will play a role. Routinely, a figure that is less than the cap might be deducted from damages, because of market forces.
When might we hear about the options?
There is a proposal in England and Wales to extend qualified one-way costs shifting to defamation and judicial review. When we consult stakeholders here, will we take a wider view of one-way costs shifting than Sheriff Principal Taylor did?
I understand that. In the interim, however, while claims management companies are not regulated here—although some of them might be de facto regulated—and all of them are regulated in England and Wales, is there not a danger that Scottish consumers could be at a disadvantage as Scotland becomes a haven for claims management companies that are not de facto regulated and that could be—
The Taylor report was not published in time for our consideration. The pre-legislative process that the Government does goes back quite a lot further than the drafting of the bill. The bill must be consulted on. The Taylor review was not published at the point at which we were doing that work. Had it been published, the report would have significantly changed the Courts Reform (Scotland) Bill by a pretty serious magnitude and probably would have resulted in a serious delay to the bill.
I have already indicated that it is our intention to legislate in the lifetime of this Parliament on this package, and that will include qualified one-way costs shifting. That is the point at which the consideration of further extension of cases that would be affected by the changes would be taken into consideration. That would be a separate piece of legislation around damages. In the consultation in advance of that legislation, we would ask about the extension to include further cases.
If something is done through primary legislation, it is set in concrete boots for a considerable time. I certainly do not take the view that court rules should be dealt with in that way, because changes to them might need to be made much more quickly than legislative change can be made unless, of course, the legislation is full of ministerial powers to make statutory instruments. However, people do not like to see such acts either, do they?
I understand; that is fine.
I understand the rationale behind qualified one-way costs shifting, but not all pursuers are under financial strain and not all defenders are well funded. Does the minister have any concerns that the proposals might make some individuals or small companies less likely to defend personal injury actions?
Agenda item 2 is an evidence-taking session on the Scottish Government’s response to the “Review of Expenses and Funding of Civil Litigation in Scotland” by Sheriff Principal Taylor. Members have copies of the response.
I welcome to the meeting Roseanna Cunningham, Minister for Community Safety and Legal Affairs, and her Scottish Government officials: Stella Smith and Kay McCorquodale, both from the civil law and legal system division, and Alastair Smith, from legal services. I understand, minister, that you wish to make a short opening statement.
We intend to discuss the matter of referral fees with the Law Society of Scotland, which would have to change its rules in relation to referral fees should it be decided that they are allowed for solicitors. We have said in the response to the Taylor report that we will take this matter forward by discussing it with the Law Society first and foremost. We have undertaken to look at other options to protect consumers.
We have no evidence of malpractice in Scotland at the moment. If that was to change, we would clearly have to think again. At the moment, however, we have no evidence of malpractice. In those circumstances, we feel that it is the right thing to allow a number of the other changes to embed and to see what impact they have on the claims management sector.
Yes, but I am just making the point that it seems to be getting very complicated. Perhaps there is a good result at the end, but there is a very complex list of options for expenses.
Thank you.
We are all right about statutory instruments.
That is difficult to quantify. In practice, defenders such as small businesses rarely, in personal injury actions, recover their costs, so they would not be in a worse position. We will consult on the issue before introducing legislation, so some of the issues will be teased out in the consultation.
Thank you, convener. I will be very brief. I should also, at this point, remind the committee of my previous declaration of interest, which still stands.
The Taylor review is, of course, inextricably linked to Lord Gill’s Scottish civil courts review; indeed, the writing of the report was predicated on the fact and the review carried out on the assumption that Lord Gill’s recommendations had already been implemented. The recommendations from Lord Gill’s review form the basis of the Courts Reform (Scotland) Bill, and the Taylor review was written on the understanding that it would follow on from the implementation of the previous review.
At stage 1 of the Courts Reform (Scotland) Bill, the committee made some connections between the bill’s provisions and Sheriff Principal Taylor’s report. Indeed, the committee’s stage 1 report highlighted the relationship between the Taylor recommendations on sanction for counsel and the issue of the exclusive competence threshold. I consider sanction for counsel, which sits in chapter 3 of the Taylor report, as the main issue that connects the bill and the report, although the remainder of chapters 2 to 4, on the cost of litigation, and chapters 7 to 9, on speculative fee agreements, qualified one-way costs shifting and damages-based agreements are of more general relevance to the bill.
The recommendations in chapters 2 to 4 of the report, including the test for sanction for counsel, have been closely examined, and the Scottish Government does not believe that these are matters for primary legislation. Instead, they sit firmly within the powers and remit of the Scottish Civil Justice Council; indeed, the Cabinet Secretary for Justice and the Lord President have agreed that to be the case. The Scottish Civil Justice Council was set up only recently, and we consider that it would be rather odd that, having set up the council, we would proceed to bypass what we had considered to be its proper work by implementing such measures in primary legislation instead of allowing the council to do what it was intended to do. The recommendations on sanction for counsel will sit with the council’s costs and funding committee, which I understand sees this issue as a priority and intends to discuss it at its next meeting later this month.
Moving through the Taylor report, we agree that the various damages-related recommendations in chapters 7 to 9 are for the Scottish Government and will require to be taken forward in primary legislation. It was never the Scottish Government’s intention to include those recommendations in the Courts Reform (Scotland) Bill; indeed, as I have already mentioned, Sheriff Principal Taylor states quite clearly in his foreword that he has assumed that the recommendations of the Scottish civil courts review, which are being delivered through the Courts Reform (Scotland) Bill, will already have been implemented. However, the Scottish Government will aim to bring forward further primary legislation within the lifetime of this Parliament to implement the recommendations in chapters 7 to 9 of the Taylor report.
After those very brief comments, convener, we can move straight to questions.
I think that John Finnie was asking for some idea of a timescale. We know that you are going to engage with the Law Society, but do you have any idea of how long that process will take?
To clarify, in his report, Sheriff Principal Taylor talks about an incremental approach. His suggestion is that qualified one-way costs shifting should be introduced in personal injury cases. As the minister said, we will consult on that in the context of the primary legislation that she mentioned. However, we first need to see how it works in the context of personal injury cases before considering whether it should be extended to other types of case.
Some of the questions that I was going to ask have been answered, particularly on future losses and on special cases. I welcome that, and I think that the committee does, too. This relates to the issues that Margaret Mitchell raised regarding small businesses and pursuers. It will be good to see what happens when the consultation comes out.
I will go further back to an issue that I think is really important: sanction for counsel. I understand what the minister said on the matter being a priority and on the Scottish Civil Justice Council considering the matter—the SCJC’s costs and funding committee has been mentioned in that regard. Could you expand on how those arrangements will work, and what will the timescale be?
10:30
I think that ordinary people understand in broad terms things such as no win, no fee. Most people understand such general ideas. We have professional legal advisers for a reason, and I do not think that there is any way round that. The expenses options are complex, but the law has always been so. This discussion is getting very jurisprudential now.
I do not know whether I am further forward with any of this. I do not mean that in a rude way. It is just that the issue is so complicated—
That is really a bigger question. Perhaps there is not a perfect way to achieve things but, in Scotland, we quite often watch things change via court decisions and case law. The civil justice rules will be appropriate to what is currently the decision-making process in the courts.
Would such defenders not have to pay the pursuers’ costs?
It is.
Nobody seems to have any.
Our intention is that the discussions will take place over the summer. You have called for evidence on the Taylor review in the context of the Courts Reform (Scotland) Bill, but this will not be part of that bill. Our discussions with the Law Society on some of the issues—this will not be the only one that we have to discuss with the Law Society—will take place over the summer. We cannot mandate the outcome of those discussions at the start of the conversation.
Convener, as I forgot to do so earlier, I now refer members to my entry in the register of members’ interests, which states that I am a member of the Faculty of Advocates. I will now pass on the questioning to other members.
Yes. I am going to move on.
I appreciate that, but I was looking for an idea of when we would have some certainty. If it is not possible to say just now, it is not possible.
That is good—there is a coffee waiting for me downstairs.
Do you think that things such as class action procedures can be introduced through rule changes and that there will be no necessity for legislative change?
That is possible. I am sorry, but you are asking me about a consultation on legislation that has not been drafted. Such levels of detail will be part and parcel of the process of developing that legislation.
As a point of clarification, I note that it is a recommendation in Sheriff Principal Taylor’s report that solicitors should be under an obligation to set out in a letter to their clients all the different funding obligations and options, and their ramifications.
—and so much is still to be discussed and consulted on. However, we have tried and you have tried, minister—we cannot ask for more than that. Thank you very much.
That is very kind of you, but I have a list of people who wish to ask questions. I understand that you are not yet on form today.
Elaine Murray has a question.
There is certainty about the legislation on the damages package because we want to do that within the current parliamentary session. Other things may take longer.
I am asking about the whole thing. The pursuer’s legal costs will always be met by the defender, which is justifiable if the defender is very wealthy, but that is not always the case.
Then they get a solicitor to explain the letter to them.
They are not quite on form yet, minister, but they will get into it.
One of the reasons why we might not be on form is that the minister has told us that a lot of what is in category 2 is actually going to be in the forthcoming damages bill.
In the longer term, we are committed to multiparty or class actions. It is not that that matter is less urgent. We will consider it in respect of the package of legislation that we have talked about, but there are issues that have to be bottomed out when public funding is involved—for example, with the Scottish Legal Aid Board. We are not quite there yet in our certainty about whether we will put that into the package of legislation, but it is being considered for it.
That is helpful.
That is true, but I expect that the court would have a view on that element of the decision-making process. As I said, such issues will come up in the consultation on the legislation that will encompass the proposals.
No. To be clear, we are talking about a separate piece of legislation. We have other damages legislation to deal with first. This would be another bill.
That is for the Law Society of Scotland to take forward, which it will probably do.
A subsequent bill.
I take it that you are referring to a letter of engagement.
Surely it will still be the case that the sheriff or judge can exercise discretion.
I have a general question. On page 2 of Sheriff Principal Taylor’s review, in the foreword, he points out the differences in the volume of litigation in England and Scotland over a three-year period. He states that
“the total number of claims for clinical negligence in Scotland was one thirtieth of all claims made in England”;
that
“the total number of claims for employer liability in Scotland was one twelfth of all claims for employer liability made in England”;
and that
“the total number of claims for motor liability in Scotland was one twenty fourth of all claims made in England”.
On any criteria, those figures are substantially less than one would have thought. What is your view of the suggestions on qualified one-way costs shifting and damages-based agreements? Accepting that we already have speculative fee arrangements, what might those do to the culture of litigation? Are substantially more cases likely to come to court?
I am sorry; at this stage, I really could not answer whether it will result in more cases. The hope is that it will encourage more people, particularly those who are currently discouraged from raising actions, and that it will provide openings for individuals to raise actions that they feel would be far too expensive. It is very difficult to estimate at this stage how many extra pursuers might be encouraged by this package of measures. It is a whole package of measures and it would be hard for me to say what the future numbers might be.
Yes—of course.
Yes. I would not want to give the impression that everything will be rolled up into one big damages bill. There are two separate pieces of legislation.
Yes.
I misunderstood that. I thought you meant the forthcoming damages bill.
I wonder whether Margaret Mitchell was asking about that. She is right to raise the issue of a plumber without insurance who finds himself or herself in court and discovers that they will have to pay the expenses, even if the pursuer has lost. I presume that a sheriff could take circumstances into account.
I turn to one of our legal members for a comment. Roderick?
No. I am glad that you asked about that, because that misunderstanding might have led to some confusion.
We go back to the Taylor review being produced on the basis of the Gill review’s having been implemented. A raft of things in the Gill review will also have impacts. Decisions, including those in the shrieval decision-making process, will continue to be made about what is fair in a particular case. We will consult on all those issues when we develop the legislation.
I think that I will keep off the issue of the duties of legal professionals for the moment. [Laughter.]
Minister, I want to move on to the question of multiparty or group actions. If it were suggested—not by me, I hasten to add; I would not be so bold—that we in Scotland might be dragging our feet on the issue of multiparty actions and if it were asked why the Government was not embracing the issue a bit more forcefully, what would you say to that?
I have indicated that we are considering including multiparty actions in the legislation that we would be likely to bring forward in this session of Parliament. If you were to argue that we should have brought it in five years ago, I would say that we have a broad spectrum of change in the justice portfolio and we have to find the right legislative vehicle for change to take place. I am sure that the Justice Committee is grateful that we have not added another piece of legislation to its workload at this stage. However, we are considering multiparty or class actions for that final piece of legislation.
You say that the legislation would be introduced in the lifetime of this Parliament, but do you have any idea of the timescale for consultation on some of the issues?
I want to pursue the sanction for counsel test a bit further, because the committee felt strongly enough about it to recommend in our stage 1 report on the Courts Reform (Scotland) Bill that the test should be introduced in an amendment to the bill, rather than being left to rules of court. I want to press you on that. We must accept that equality of arms is at the heart of access to justice, and the minister will be aware that there is a lot of disquiet on the issue of sanction for counsel. In those circumstances, would it not be worth while to put the measure in the bill?
No, because if we put it in the bill, it would be that much harder to change it in future. We have set up the Civil Justice Council to do a job. As I have said, it would be paradoxical to set up a body to do a particular job and then proceed to bypass it by introducing primary legislation instead. The agreement that has already been reached between the Cabinet Secretary for Justice and Lord Gill is appropriate, and the issue is appropriate for the Civil Justice Council.
Your response to the Taylor review recognises some of the concerns. It states:
“in the early days of the new exclusive competence limit, sheriffs should be encouraged to grant leave to appeal ... where they might not otherwise do so”,
in order for jurisprudence to be built up. That suggests that there will be issues and that the disquiet that we are hearing has some basis.
The point that Sheriff Principal Taylor made in evidence to the committee and in his review was that sanction for counsel is rarely refused. There will not be an abrupt change in practice. If there was an abrupt change, I am sure that the Civil Justice Council would want to consider that. However, there is no indication that that will be the case.
Perhaps representatives do not ask for sanction for counsel unless they are pretty sure that they will get it. Perhaps that is why there is such a good hit rate. People will not request it if they think that the request will be rejected. Those who ask for it will be pretty clear that they will get it, on the basis of precedent. Is that the case? Is that why sanction is never refused?
Good morning, minister.
The Scottish Government’s response refers to a cap on the amount of a client’s damages award that could be taken to satisfy a solicitor’s fee. A damages award or agreement could include an amount for future losses, including the loss of earnings or sums for the future care of the pursuer. In England and Wales, that has been protected for the client, but in the Taylor report there is no mention of that. Are future losses deserving of special consideration?
I think that future losses are worthy of special consideration, and we intend to consider the matter. That may not have been clear from the response, but I put on the record that we intend to consider it, if that is the principal concern.
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