QOCS brings landmark legal changes to Scotland

Andrew Lothian, insurance partner at Glasgow law firm DWF, describes how changes to personal injury cases in Scotland could have implications for insurers and their clients

The introduction of Qualified One-Way Cost Shifting (QOCS) was recommended in Chapter 8 of Sheriff Principal Taylor’s 2013 Review of the Expenses and Funding of Civil Litigation in Scotland. The legislative purpose of this reform is to increase access to justice and ensure meritorious claimants are not dissuaded from litigating by the risk of an adverse costs award.

The term ‘one-way’ means it would only be the pursuer (claimant) who would be awarded expenses if successful, and ‘qualified’ because there would be circumstances in which the pursuer might lose the benefit of QOCS. The legislation to introduce QOCS is the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018.

From 30 June onwards, any person raising a court action for personal injury compensation in Scotland will no longer be liable to pay the other side’s legal costs, even if they lose the case, unless they fall into an exception to the rule.

While there is no doubt that removing the risk of an adverse costs award will take away one of the disincentives to litigate, the bigger Scottish claimant firms already pick their cases well and this reform on its own will cause little change.

It may be that claimants feel emboldened to run weaker liability arguments, or hold out for higher damages awards, but good claims will still be good claims and they will be pursued in broadly the same manner.

This will mean costs can only be recovered from pursuers if they fall foul of one of the three QOCS exceptions, whereby the claimant or their representatives make “a fraudulent representation”, act in a “manifestly unreasonable” manner, or behave in a way that constitutes an “abuse of process”.

Insurers that are aware of these issues need to have genuine integration between pre-lit and litigated strategies, and at the same time must be alive to picking the right cases to fight to trial.

Early case law on QOCS in Scotland will be critical in helping shape the wider claims environment. It is vital that insurers choose good cases to run and are not shy of taking these points and taking on the difficult cases.

Management information specific to Scotland will be crucial to monitor changes in behaviours. The legislation on QOCS is subject to a five-year review, therefore we strongly recommend data on Scottish claims are identified and captured rigorously in the post-QOCS environment, so that arguments can be presented to legislators on the cost and effect of disproportionate costs.