Our monthly round-up of developments dominating the legal landscape in Scotland.
The Headlines for Scotland in 2020
With the advent of QOCS without simultaneous restriction on claimants' costs, the lower discount rate and uncertainty around interpretation of new fraud provisions, we predict a significant increase in personal injury litigation in Scotland in the next 12 months.
The Discount Rate
In September 2019, the GAD recommended that the Scottish Discount rate remain at -0.75% resulting in a significant differential of 0.5% between Scotland, and England and Wales, and a dual system where the cost of claims will be significantly higher for the NHS and taxpayers in Scotland.
Consequently there is a risk that we will see an increase in ‘forum shopping’ with claimants choosing to litigate in Scotland rather than England & Wales if they can find a basis for doing so.
An example of the inflationary effect of the rate applicable in Scotland is highlighted in the table below.
Andrew Lothian, DWF's Head of General Insurance Scotland and current Scottish Regional Representative of FOIL commented:
"It is disappointing that the statutory "further margin" imposed by the Scottish Government will have the effect of driving up the cost of claims in Scotland when compared with the rest of the UK. We will continue to argue for a fair system of compensation that reflects how claimants actually invest their damages awards and avoids over-compensation."
The anticipated introduction of QOCS in Scotland in quarter 2 this year will result in a major change to the claims landscape. Claimants will no longer require to pay a defender's costs if their case is unsuccessful. In general terms, QOCS protection is lost only if fraud is established. As a consequence, we expect a significant spike in claims volumes and litigation rates. It is essential that insurers familiarise themselves with the proposed legislation and have strategies in place to deal with their Scottish claims. DWF in Scotland has an impressive track record of identifying potentially fraudulent claims at an early stage, advancing those arguments before the court and placing significant risk on claimants and their solicitors in proceeding, with the result that a high proportion of such claims are abandoned.
It remains to be seen how the courts will interpret the legislation which sets out when QOCS protection will be lost. The term "fundamental dishonesty" does not feature in the Scottish legislation. Rather, QOCS is lost where the claimant or the claimant's legal representative:-
With the significant changes in the market in Scotland we recognise the importance of a robust counter fraud strategy across all lines. Our market-leading counter fraud team in Scotland will be monitoring claimant behaviours and emerging trends closely in order to develop strategies to disrupt them.
The issue of costs (or expenses as they are called in Scotland) will become increasingly significant this year. The Scottish Government has so far resisted taking action to address disproportionate claimant costs, and there does not appear to be any appetite for this in the near future. The introduction of the whiplash reforms this year in England and Wales means a low value whiplash claim in Scotland is likely to be worth up to ten times more in compensation, and costs, than the tariff award of £235 with no costs in England and Wales. This is a massive difference and one that will only serve to present new opportunities for generating claims and fraudulent practices in Scotland.
We have made and continue to make representations directly to the Scottish Government, along with the ABI and other insurer representatives, to assist their understanding of the nature of disproportionate claimant/pursuer costs in Scotland and make the case for change.
The Insurance Team in Scotland continues to grow
DWF has recruited senior insurance litigator, Lynne Macfarlane, as a Director in its Scottish insurance practice.
Lynne joins the Scottish team from Clyde and Co, where (via a merger) she has spent the entire 20 years of her legal career. She has extensive experience in defending leading insurers against employers’ liability, public liability, catastrophic injury, road traffic, product liability and regulatory claims. Lynne was the was the first female lawyer at Simpson and Marwick to achieve extended rights of audience in the supreme courts as a solicitor advocate, and in 2015 was accredited by the Law Society of Scotland as a specialist in personal injury law.
Andrew Lothian, DWF’s head of general insurance in Scotland, said: “We are delighted to welcome Lynne to the insurance practice in Scotland. She is a senior and experienced insurance litigator who will add substantial breadth to our insurance legal services provision, for the benefit of insurer clients both in Scotland and further afield.”
Lynne said: “DWF has an enviable reputation as a leading legal provider to insurers, not only for complex and casualty work but also for its approach to providing an award-winning analytical and technology-led service. I am really looking forward to being a part of the future success of the insurance practice in Scotland.”
Read our case alert on the admissibility of late amendments, prepared by our Glasgow team on the decision by Lady Wolffe in the Commercial Court Autauric Limited v Glasgow Stage Crew Limited  CSOH 111
If you wish any further advice please contact a member of our team below.
Scottish Abuse Claims
The Historical Child Abuse Redress Bill
Pre-legislative consultation has now closed, and legislation will be introduced to the Scottish Parliament in spring 2020 with a view to completing Parliamentary consideration of the Bill in early 2021. Financial contributions for redress are being sought from those who bear responsibility for historical abuse.
What does this mean for insurers?
Redress payments to survivors may be dependent on the survivor agreeing not to raise civil action in respect of abuse. That agreement may come in the form of a waiver, and consideration is ongoing about extending the protection of that waiver to those who make fair and meaningful financial contributions to the redress scheme.
Participation in the scheme may therefore offer an opportunity to crystallise future liability for historical abuse.
Scottish Child Abuse Inquiry
- 7 January – Published Third Case Study Findings on residential institutions run by Quarriers, Aberlour Child Care Trust, and Barnardo’s (QAB). Systems, policies and procedures were closely examined and found to be lacking.
- 21 January - Lady Smith, Chair of the Scottish Child Abuse Inquiry called for evidence from former pupils and staff at boarding schools before the case study begins in the summer.
What are we doing?
- 24 March - Disrupt to Progress
- 16 June – Disrupt to Progress
- 17 September - Scottish Claims Conference - Glasgow
- November - QOCS Client Roadshow - Manchester
- November - QOCS Client Roadshow - London
- 8 December – Disrupt to Progress
For further information please contact:
Andrew Lothian, Head of General Insurance (Scotland) on 0131 474 2305
Alison Grant, Partner, Professional Indemnity (Scotland) on 0141 228 8127
Jill Sinclair, Head of Counter Fraud (Scotland) on 0141 228 8196
Lynne Macfarlane, Director on 0141 228 8006
Caroline Coyle, Senior Associate and Professional Support Lawyer, Insurance on 0141 228 8132
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.