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Scotland Update

January 2018

Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill

This Bill will, when passed, will introduce Qualified One-Way Costs Shifting (QOCS) and Damages Based Agreements (DBAs) into Scotland.

Following Andy Lothian's evidence session on behalf of FOIL before the Justice Committee of the Scottish Parliament on the above Bill, the Justice Committee produced its Stage 1 report.  We sent an alert to clients detailing the main facts.

The Stage 1 debate in the Scottish Parliament took place on 16 January and the full transcript can be read here.  While the Scottish Parliament agreed to the general principles of the Bill, MSPs made a number of recommendations as to how the Bill should be improved.

Summary of key issues

  • The Scottish Government has accepted the insurance industry's suggestion to extend the mandatory pre-action protocol for personal injury claims from £25,000 to £100,000 and to introduce a pre-action protocol for clinical negligence cases. The Scottish Civil Justice Council is considering how to implement that change.  It is also considering a compulsory pre-action disease protocol. 

  • QOCS exceptions - the Scottish Government will consider amendments to tighten up the definitions of circumstances in which the benefit of QOCS might be lost. 

  •  Claims Management Companies in Scotland will be regulated in line with the rest of the UK as a result of amendments to the Financial Guidance and Claims Bill at Westminster.  The only downside is that the Scottish Government does not believe that the commencement date of the Scottish Civil Litigation Bill should be delayed until the Financial Guidance and Claims Bill has received Royal Assent, so there may be a gap between the introduction of QOCS and DBAs  and CMC regulation being in place.

  •  Ring-fencing of future losses – arguments were tabled by several MSPs in favour of removing future care costs from DBA calculations relating to solicitors' fees.  It is encouraging to see there is support for this issue and we will continue to support this proposal.

Next Steps

The Scottish Parliament agreed by motion to the general principles of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill.

We expect the Justice Committee to start consideration of the Bill at Stage 2 on 6 February. We will be working with the ABI and other interested stakeholders on proposed amendments to improve the Bill.

Claims Management Companies

Our work around claims management companies (CMCs) led to the announcement the Scottish Government was to take forward regulation of CMCs in Scotland.   This represents a significant step forward for insurers.  While it seems that regulation may not be in place before the introduction of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill it is clear the Scottish Government is committed to regulation of CMCs: 

"We have been in discussions with the United Kingdom Government about the extension to Scotland of the regulation of claims management companies by the Financial Conduct Authority, as proposed in the Westminster Financial Guidance and Claims Bill.  Claims management companies will therefore be regulated in Scotland."

Annabelle Ewing, Minister for Community Safety and Legal Affairs

Event - We are hosting a roundtable discussion on 9 February this year to look at the implications of regulation of CMCs in Scotland.  We will be joined by: Kevin Rousell, Head of Claims Management Regulation at Ministry of Justice, who will provide an overview of how CMCs are regulated in England and Wales and what the future might hold for Scotland; and by Alastair Ross who will consider regulation of CMCs from the perpsective of the ABI.  Please click here to register if you are interested.

Abuse Claims

The Limitation(Childhood Abuse) Scotland Act 2017 came into force at the end of last year after which we held an Abuse Conference in November 2017 to discuss tactics, claims volumes and activity, and strategies to deal with these difficult claims.  There continues to be a growing focus in the media on the victims of abuse and there have been rumours of a number of Scottish solicitors having a high number of these claims waiting to litigate. The Scottish Government estimates 2,200 new cases and Police Scotland has issued statistics suggesting the number of historic cases has risen by 165%. 

Scottish Child Abuse Inquiry

The Inquiry now in Phase 2 and the evidential hearings continue to examine the evidence relating to residential child care establishments run by Catholic Orders. The hearings are expected to run until the end of January. 

The Inquiry will not publish its final report and recommendations until October 2019.

Details of those who have given evidence and transcripts of the hearings can be viewed here.

News and updates can be viewed via this link as the enquiry progresses.

https://www.childabuseinquiry.scot/

 

Scottish Government Activity

Key Issues for 2018

Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill

This Bill will, when passed, will introduce Qualified One-Way Costs Shifting (QOCS) and Damages Based Agreements (DBAs) into Scotland.

Following Andy Lothian's evidence session on behalf of FOIL before the Justice Committee of the Scottish Parliament on the above Bill, the Justice Committee produced its Stage 1 report.  We sent an alert to clients detailing the main facts.

The Stage 1 debate in the Scottish Parliament took place on 16 January and the full transcript can be read here.  While the Scottish Parliament agreed to the general principles of the Bill, MSPs made a number of recommendations as to how the Bill should be improved.

Summary of key issues

  • The Scottish Government has accepted the insurance industry's suggestion to extend the mandatory pre-action protocol for personal injury claims from £25,000 to £100,000 and to introduce a pre-action protocol for clinical negligence cases. The Scottish Civil Justice Council is considering how to implement that change.  It is also considering a compulsory pre-action disease protocol. 
  • QOCS exceptions - the Scottish Government will consider amendments to tighten up the definitions of circumstances in which the benefit of QOCS might be lost. 
  • Claims Management Companies in Scotland will be regulated in line with the rest of the UK as a result of amendments to the Financial Guidance and Claims Bill at Westminster.  The only downside is that the Scottish Government does not believe that the commencement date of the Scottish Civil Litigation Bill should be delayed until the Financial Guidance and Claims Bill has received Royal Assent, so there may be a gap between the introduction of QOCS and DBAs  and CMC regulation being in place.
  •  Ring-fencing of future losses – arguments were tabled by several MSPs in favour of removing future care costs from DBA calculations relating to solicitors' fees.  It is encouraging to see there is support for this issue and we will continue to support this proposal.

Next Steps

The Scottish Parliament agreed by motion to the general principles of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill.

We expect the Justice Committee to start consideration of the Bill at Stage 2 on 6 February. We will be working with the ABI and other interested stakeholders on proposed amendments to improve the Bill.

Counter Fraud Scotland

Legal Awards

We are delighted to be shortlisted again as  finalists at the

Scott +Co Legal Awards 2018 in the Innovation in Practice category.  Having won with a unanimous vote last year we are keen tor retain the  title.  Our submission this year concentrates on the work our intelligence team have carried out tracking the migration of fraudsters north of the border.

Pre-litigation outsource success

Over the past couple of years we have developed a bespoke innovative product whereby Scottish motor injury claims up to the value of £25,000 are outsourced to DWF in Scotland from receipt of the letter of claim  This means we can provide a unique “cradle to grave” total claims handling service, bringing specialist KYO expertise and insurance know-how to the entirety of our clients claims book. All claims are triaged for fraud indicators and the team have  several strategies in place for dealing with different types of fraud which are driven largely by our KYO profiling.  The project began in November 2016 and has already delivered savings of  around £1 million per annum and a fraud kick out rate of 78% for one client.

This month has seen the project grow from strength to strength with 11 suspected fraudulent claims being withdrawn. 

If you want to discuss this project in more detail then please get in touch with Jill Sinclair.

Scottish Civil Justice Council

The Costs and Funding Committee met recently to consider the following matters:

Justice System reform: Taylor Review

The main focus of the Committee has been the implementation of the Taylor recommendations in the sheriff court with a wider rationalisation of the rules regulating expenses.

Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill

The Committee considered the Bill with a view to identifying which provisions, if enacted, may call for consequential provision in rules of court.

The Personal Injury Committee

Walter Drummond-Murray (Scottish Government) advised that ministerial consideration is currently being given to a Damages Bill which was announced in the programme for government for this year. He advised that the Bill will amend the law on the personal injury discount rate and enable the courts to impose periodical payment orders when making an award of damages in respect of personal injury.

Compulsory Clinical Negligence Pre-Action Protocol – the pilot period of one year has ended and the group will now meet to try to move matters forward with a draft protocol. 

Compulsory Disease Pre-Action Protocol - the group in charge of drafting the protocol is comprised of pursuer solicitors, defender solicitors and insurer representatives.  They have largely agreed on the main overarching policy decisions about the disease protocol.  The most recent meetings have involved detailed consideration of a draft protocol and discussion around some more complex issues.   It is intended that the Committee will be invited to consider and, if content, approve the procedure in the protocol before it is passed to the Costs and Funding Committee for consideration of expenses.

Contact

For further information please contact Andrew Lothian, Head of General Insurance (Scotland) on 0131 474 2305, Caroline Coyle, Associate, Professional Support Lawyer Insurance on 0141 228 8132 or Jill Sinclair, Head of Counter Fraud (Scotland) on 0141 228 8196

 

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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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