Hansard

I will speak to amendments 1 to 4 in my name and against Margaret Mitchell’s amendment 2A.

I apologise in advance, Presiding Officer, as these are complex amendments and it may take some time to rehearse the arguments and issues. I also declare an interest, as a proud trade unionist and a member of the Community trade union and the Union of Shop, Distributive and Allied Workers. I have worked on the amendments with the Scottish Trades Union Congress and the lawyers who work with it on personal injury cases.

Ultimately, the decisions that the Parliament makes on the bill are around access to justice. For each amendment, we should set ourselves one clear test as we vote—will voting for the amendment increase access to justice or reduce it? That is precisely what lies at the heart of Sheriff Principal Taylor’s proposals and at the heart of the bill. Furthermore, we must ask ourselves whether the amendment makes it more or less likely that a claimant who has been wronged will get the justice that they deserve. Importantly, we must also ask whether, when damages are awarded, that makes it more or less likely that a claimant will get the true value of their claim.

At stage 2, the Justice Committee decided to agree to amendments from Margaret Mitchell. My amendments today seek to reverse that decision and I would like to explain why. The issue at hand is whether success fee agreements, which are also known as damages-based agreements and best known as no-win, no-fee agreements, are allowed to include any proportion of future losses in the fee for the lawyer.

On the face of it, as I am sure that Margaret Mitchell will argue, that seems unfair. The argument goes that lawyers should not receive a single penny of the damages that are awarded for the costs of a catastrophic injury. However, we must return to that test—does that increase access to justice? Sheriff Principal Taylor, the architect of the legislation as the author of the report that led to the bill, wrote to the committee—in a surprising and extraordinary move in many ways—and set out in the starkest possible terms his view of the bill as it was amended at stage 2. He wrote that the bill, as amended, posed

“an existential threat”

to damages-based agreements

“being offered in higher value cases in Scotland”.

In other words, if we ring fence future losses, lawyers are simply not incentivised to offer no-win, no-fee agreements for those higher-value cases.

Sheriff Principal Taylor’s report had to strike a carefully constructed balance to ensure that lawyers would actually offer no-win, no-fee agreements to those who have suffered catastrophic injuries. To do that, he allowed lawyers to include a small—and, importantly, capped—percentage of damages. That means that lawyers will be incentivised not just to pursue catastrophic cases but to ensure that they are settled for the maximum possible value—in other words, the interests of the client and the lawyer are perfectly aligned.

What if we do not reverse the stage 2 amendments? What would the impact be? Sheriff Principal Taylor was very clear:

“The likely outcome is that cases will either not be raised at all or will settle for considerably less than the true value of the claim.”

That is a direct quotation. Furthermore, the Law Society of Scotland agrees. It stated:

“To ring-fence future losses from the calculation of a success fee may mean that success fee agreements will not be offered in the higher value cases, as it is simply not economic to do so and the public at large will be the poorer.”

The reason that we can be so sure about this is that a recent change along these lines in England and Wales has led to exactly the situation that Sheriff Principal Taylor and the Law Society outlined. No-win, no-fee agreements are simply not being used to fund personal injury actions and thus access to justice has been greatly diminished.

Furthermore, ring fencing future losses could lead to past losses and future losses being treated differently in the courts, leading to two unintended consequences. Those with existing losses—losses already incurred—would have more opportunity to bring forward litigation than those with future losses, due to the greater availability of success fee agreements. That feels inconsistent and unfair. It could also incentivise the delaying of action so that past losses are incurred rather than being future losses at the point that court action takes place.

I turn to Margaret Mitchell’s amendment 2A. Firstly, and fundamentally, it is based on an assumption that the court fees that are awarded to lawyers are sufficient. At present, the fees that lawyers receive for cases are simply not enough to cover their costs. If they were, no one would be going down the current damages-based agreement route. However, they are doing so in large numbers, on the basis of taking 20 to 35 per cent cuts of the total damages amount.