By Matthew Best, Senior Underwriting Manager
(Estimated reading time: 4 minutes 7 seconds)
The introduction of costs shifting (or QOCS as it has been labelled) in Scotland for personal injury and clinical negligence cases provides a good opportunity for Scottish lawyers to explore the prospects of arranging After-The-Event (ATE) legal expenses insurance for their clients at an affordable price.
The experience of the same changes in England and Wales over 8 years ago should give a good indicator to Scottish lawyers representing pursuers. One consequence is that, since 2013, ATE insurance premiums have reduced significantly.
ATE insurance has been available in Scotland for nearly 20 years, but the premium rating has often appeared too high for many pursuers to contemplate.
The new rules on QOCS for Scotland are significant because they alter the “loser pays” principle in personal injury actions. In these cases, if the pursuer is unsuccessful, they will no longer be liable for the defender’s legal expenses, provided they conducted the proceedings “in an appropriate manner”. Pursuers will though still face the risk of paying for their own outlays if they lose.
In clinical negligence cases and higher value personal injury cases those outlays are often expensive.
Outlay funding, known as disbursement funding in England and Wales, has proven very popular with clients of our partner law firms. This feature can be easily added to your ATE insurance offering from Temple.
In England and Wales, it is generally more difficult to arrange cover for an individual case and increasingly necessarily for a law firm to agree a facility with an ATE insurance provider. If you’ve not done so already, we recommend that Scottish personal injury and clinical negligence law firms to engage immediately with ATE insurers to ensure they will have a guaranteed insurance facility in place.
Liability insurers and their representatives will still continue to challenge the introduction of costs shifting in Scotland. The experience of this in England and Wales has not caused claims frequencies to rise. In fact, for certain types of personal injury case there has been a reduction in claims – although I accept this may be due to other reforms rather than just costs shifting alone.
So what do we know about QOCS for Scotland?
That the new rules apply to personal injury proceedings raised after 30 June 2021. This has created a temptation to delay raising claims, particularly where the prospects of success are less clear cut, until after that date – and we may see a sharp increase in the number of personal injury cases raised from then.
We also note from the framework, that –
- QOCS will apply to restrict a pursuer’s liability for expenses in personal injury proceedings (including appeals). The current Scottish legal reforms do not extend to commercial litigation.
- The effect is that the court will not make an award of expenses (costs) against an unsuccessful pursuer, so long as the case has been conducted “in an appropriate manner”: the protection of QOCS will be lost if the pursuer or their legal representative behave fraudulently, or in a manifestly unreasonable manner, or conduct the proceedings in a manner considered an abuse of process.
- The protection of QOCS does not extend to expenses relating to another type of claim brought alongside a personal injury claim in the same proceedings.
- Provision is made for the rules to specify exceptions to the default application of QOCS.
- QOCS will only apply to claims or proceedings commenced on or after 30 June 2021. Where proceedings are brought on or after that date, QOCS will not apply to any work undertaken on the claim in advance of proceedings being commenced.
We feel that there are likely to be test cases, particularly around the interpretation of provisions in the 2018 Act which set out the circumstances in which a pursuer is said not to have conducted the proceedings in an appropriate manner.
Clarification on how those provisions will be interpreted, particularly the phrases “fraudulent representation”, “manifestly unreasonable” and “abuse of process”, which have not been defined in the 2018 Act, will be eagerly anticipated by litigants on both sides of a potential personal injury action.
I consider there is a real opportunity for Scottish lawyers to be able to offer their pursuer clients the option of affordable insurance protection.
ATE insurance providers already offer insurance in Scotland and many pursuers take up such cover. At Temple Legal Protection we have been providing ATE insurance in Scotland for nearly 20 years and are currently engaging with many law firms to ensure they are ready to offer this to their clients as soon as QOCS is introduced.
If you do one thing after reading this, please review your ATE insurance and outlay funding arrangements/requirements and have dialogue with your insurers.
Temple is already working or in dialogue with a number of Scottish law firms who are interested in seeing what we can provide their clientele. We would be only too pleased to present you our ATE insurance and outlay funding at very competitive rates.
To discuss your firm’s situation, please call me on 01483 514804 or email firstname.lastname@example.org with your observations on these issues or to discuss your ATE insurance requirements.
Matthew Best Cert CII
Matt has an insurance background and joined Temple in 2011 having worked for 4 years in a leading insurance company where he was dealing with personal injury work. Matthew was promoted to Underwriting Manager and subsequently Senior Underwriting Manager taking on overall responsibility for Temple’s personal injury and clinical negligence underwriting department.
In 2022 Matt joined the board of directors as Director of ATE Partnerships. Matthew has cultivated fantastic relationships with our business partners for many years. His ability to build a clear understanding of their requirements and more importantly what is required to fulfil such requirements means he is ideally placed to support the strategic direction of the company.
Matt remains the head of the personal injury and clinical negligence department and is committed to all Temple’s business partners in order to deliver the highest level of service they expect. He is also responsible in making sure that Temple’s ATE and disbursement funding products remain competitive, but most importantly that they are fit for purpose for solicitors and their clients.
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