Expenses: the Taylor Report and

Recent cases

Andrew Smith QC

Kay Springham, Advocate

Seminar Outline

• The Taylor Review – the main recommendations

(Andrew Smith QC)

• Recent authorities bearing on expenses (Kay

Springham, Advocate)

The New Language

• QOCS

• SFA

• DBA

• CLAF

• SLAS

• PPO

• PEO

• LASPO

• BTE

• ATE

• MPAS

• GLOS

Introduction

• Taylor Review is annex to Gill Reforms

• Recommendations almost certain to be

implemented

• Implement by primary legislation

• SSI

• Professional Regulation

• Practice by the Courts

The English Experience

• Far wider reaching than E and W

• Far more pursuer minded than E and W

• Starting with a “clean sheet” without the

problems that were in England

• Inevitable “satellite” litigation in Scotland, with

appeals and complex motions

• Significant changes to business models (e.g.

software for expenses management)

The Main Themes of the Review

• The Cost of Litigation: Judicial Expenses

• Counsel’s Fees and Expert Witness Fees

• Fixed Expenses and Summary Assessment of Expenses

• Protective Expenses Orders

• BTE Insurance

• Speculative Fees Agreements

• QOCs

• DBAs

The Main Themes of the Review

• Multi Party Actions

• Regulation

1/10: Costs of Litigation

• Difference between recovered expenses and

client’s liability is driving force

• Desire to narrow gap, to make litigation more

attractive in Scotland

• Desire to encourage “efficiency” in litigation:

the increasing use of electronic documentation

to ensure efficiency

2/10 Counsel’s Fees, fees in general and

Expert Witness Fees

• Reasonableness

• “Proportionality” – not defined

• Extensive tables of fees for

Commercial Causes

• Additional Fees: recast of criteria

• Judge fixing percentage uplift

• Fix percentage at the start (max

100%)

The Test for Sanction for Counsel

• The test to be as it is now – whether

“appropriate” – McAllister v SLAB

• Should be distinguished from whether it is

“necessary”

• Not as high as “exceptional circumstances”

Legal Aid implications: Sanction in the

Sheriff Court?

• Interest on Expenses – from

28 days after account lodged

recommended in Taylor

• Four month rule introduced to

Sheriff Court for submitting

account of expenses

If sanction is granted by a sheriff, how

does that impact on an application for

sanction from SLAB?

Counsel’s Fees

• Advance Sanction in Sheriff Court

• Control over level of fees to

counsel – clerks’ input

Statutory Instrument (Sanction for the

Employment of Counsel in the Sheriff

Court) 2011

Recommend:

Consider instructing counsel for

the motion for sanction

Ensure that able to advise on

proposed fees

3/10 Fixed Expenses; Costs Budgeting and

Summary Assessment of Expenses

• Budgeting in Commercial

Cases (C of S and Sh Ct)

• Rolled out to all litigation

Summary Costs Assessment

4/10 Protective Expenses Orders

Currently not limited to Environmental

cases

• To ensure compliance with Aarhus

• Sullivan Report – blatant non compliance by UK

• To be extended to all public interest cases

• Essentially “costs capping” by the Court

• See Uprichard v Scottish Ministers

5/10 BTE Insurance

BTE to be “encouraged”

A number of problems

Regulation of making sure that

insured knows he can choose his

solicitor

6/10 Speculative Fees Agreements

Success Fee: AKA “SFA”

or Speculative Fees Agreement

• From Client’s own Damages

• Applies to all heads of claim in PI cases

• Applies to all damages in other types of case

7/10 QOCs

Qualified One Way Costs Shifting

Will initially only apply to PI cases

including Clinical Negligence

Will be extended to defamation soon

in England. Scotland to follow

Intention to apply to other types of

cases too

The Rules

If the pursuer wins, he is awarded

expenses

If the pursuer loses, he does not pay

expenses

The Exceptions

• Unreasonable conduct by the pursuer eg where

there is summary dismissal of the case

• Dishonesty or Fraud

• Failure to beat a tender (by an unreasonable

margin) BUT recovery limited to 75% of what is

awarded

8/10 DBAs

“Damages Based Agreements”

Current Difficulty

• Prohibited by Faculty of Advocates

• Unenforceable per Law Society of Scotland

Solution

Changes in Regulations for bodies

Statutory Instruments?

Primary Legislation?

Operation of DBAs

• In Addition to SFA

• Number of checks to ensure client fairly

informed including cooling off

• Attaches to all claims, past and future other than

PPOs

• Controls to ensure approval of £1m plus

settlements per SFAs

How a Pursuer’s Solicitor can Max the

return in a PI case

• His client is protected by a QOC

• He obtains an additional fee from the defender

• He has an SFA or DBA in place giving him a

further considerable slice of fees, doubling

them, up to maxima

Example

• Say the case settles for £500k

• Fees are assessed at £100k

• Additional fee of up to £100k

• He can charge up to £60k in SFA success fee

• OR he can charge up to £60k in DBA

• Note that the DBA is easier to obtain the

sizeable chunk as it is not dependent on costs

assessment

Commercial Example

• Fees of £100k

• Additional fee of £100k

• Success fee of £100k

• Or DBA of up to £250k

• Note DBA gives higher sum than SFA and is not

dependent upon the fees assessed

9/10 Multi Party Actions

MPAs

Main Types of MPAs

• Single cause of action for multiple parties –

pharma and other medical cases

• Lack of experience in Scotland on such cases

• Encouraging Rules of court to ensure efficiency

Scottish Experience

• Braer

• Piper Alpha

• Vioxx

• Celebrex

• Anti Depressants

• TVM

Future Claims in Scotland?

• Share/securities fraud? – litigation by pension

funds or large groups of individuals

• Major disaster litigation: airlines, coach crashes

• Negligence Medical Treatment by “rogue”

doctors

10/10 Regulation of Claims

Management Companies