The Scottish instrument is called a success fee agreement

There is no such thing as a conditional fee agreement in Scots law, and the phrase “no win no fee” is marketing rather than a legal category. What a Scottish solicitor offers you is a success fee agreement, defined by section 1 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 as an agreement under which you pay the solicitor a fee if you obtain a financial benefit, and pay nothing, or something lower, if you do not. The older Scottish name for the same idea is a speculative fee agreement, and you will still hear practitioners use it.

Two formal requirements are worth knowing before you sign anything. Section 7 of the 2018 Act requires a success fee agreement to be in writing and to specify the basis on which the amount of the success fee is to be worked out. An agreement reached over the telephone, or a letter that says only that the firm will take “a percentage”, does not meet that standard. And section 2 removed the old objection that such an agreement was a pactum de quota litis, an unlawful bargain for a share of the litigation. That objection is what kept percentage funding out of Scotland for a very long time, and its removal is the reason the modern market exists at all.

What your solicitor may take, exactly

The caps are set by regulation 2 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 (Success Fee Agreements) Regulations 2020, SSI 2020/110, which came into force on 27th April 2020 and applies to agreements entered into on or after that date. Regulation 2(1) is the operative provision: a success fee agreement must not require you to pay a success fee which, including VAT, exceeds the maximum. The cap is expressed by reference to the financial benefit you obtain.

For a claim for damages for personal injuries, or for a death caused by personal injuries, regulation 2(3) sets a sliding scale that steps down as the damages rise.

The arithmetic at four different award sizes, and every other deduction that can lawfully come off a Scottish settlement, is set out in what your solicitor can take from your compensation.

Two other caps sit outside that scale and are frequently confused with it. Regulation 2(4) caps the success fee in employment tribunal proceedings at thirty five per cent of the financial benefit. Regulation 2(5) caps it, for every other kind of civil matter, at fifty per cent. Those are flat percentages, not tiers, and they are not the injury figures. A solicitor acting on a commercial dispute or an inheritance claim on a success fee basis may lawfully take half of what you recover, and that is a very different bargain from the one an injury client is offered.

Where you instruct more than one provider on the same matter, a solicitor and then a claims management company, or a solicitor and then counsel on a separate agreement, regulation 2(6) applies the cap to the total payable to all of them. The cap cannot be multiplied by splitting the work.

The rule about future loss that almost nobody explains

On a serious injury the largest single element of the award is often future loss: future wage loss, future care, future equipment. Section 6 of the 2018 Act keeps that element out of the calculation unless strict conditions are met. Section 6(4) provides that the agreement must exclude the future element from the sum on which the success fee is calculated, unless the future element falls within section 6(5).

It falls within section 6(5) only where it is to be paid as a lump sum and either does not exceed £1,000,000, or exceeds £1,000,000 and both of two things are true: the solicitor had not advised you to take the future element in periodical instalments, and the condition in section 6(6) is satisfied. That condition is that a court or tribunal awarding the money has stated it is satisfied a lump sum is in your best interests, or, where the case settles, that an independent actuary has certified the same after consulting you personally, in the absence of your solicitor.

The practical effect is that on a catastrophic injury the sum the percentage bites on is frequently far smaller than the headline settlement. It also means a firm cannot quietly steer a badly injured client away from a periodical payment order in order to enlarge its own fee. If your agreement calculates the success fee on the whole award without addressing future loss, section 6(7) makes it unenforceable to that extent.

Who pays the outlays, and why it matters more than the percentage

Outlays are the money spent along the way rather than charged for time: the medical report, the engineering or accident reconstruction expert, the cost of recovering hospital and occupational health records, court dues. On a moderate injury claim they run into thousands of pounds, and on a clinical negligence claim considerably more.

In an injury claim they are not yours. Section 6(2) requires the agreement to provide that you are not liable to make any payment, including outlays incurred in providing the services, apart from the success fee, regardless of whether any damages are obtained. That is a statutory requirement rather than a commercial gesture, and it is the single largest practical difference between the Scottish arrangement and the English one. There is one carve-out: section 6(3) provides that those outlays do not include insurance premiums, so an after the event premium can still be passed to you.

Note the words “apart from the success fee”. If you win, and the other side is found liable in expenses, section 3 allows the solicitor, unless the agreement says otherwise, to recover and retain those judicial expenses and still charge the success fee. Recovered expenses do not reduce what you pay. That is lawful and standard, and it is also the point at which a client who assumed the two would cancel out receives an unwelcome surprise. Ask about it before you sign.

What happens if you lose

The fear that stops most people is not the solicitor's fee. It is the other side's bill. Section 8 of the 2018 Act introduced qualified one way costs shifting for Scotland. Where the person bringing civil proceedings makes a claim for damages for personal injuries, or for the death of a person from personal injuries, and conducts the proceedings in an appropriate manner, the court must not award expenses against that person in respect of the claim or any appeal in it. Section 8 was brought into force on 30th June 2021 by the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 (Commencement No. 4 and Transitional Provision) Regulations 2021, SSI 2021/125, and the court rules that carry it were made by the Act of Sederunt (Qualified One-way Costs Shifting) 2021, SSI 2021/226, which applies to first instance proceedings commenced on or after the same date.

The protection is qualified, and the qualifications are real. Section 8(4) provides that a person does not conduct proceedings in an appropriate manner where that person or their legal representative makes a fraudulent representation or otherwise acts fraudulently in connection with the claim, behaves in a manner which is manifestly unreasonable in connection with the claim, or otherwise conducts the proceedings in a way the court considers amounts to an abuse of process. Section 8(5) sets the standard of proof for fraud at the balance of probabilities, which is a lower bar than many people assume.

There is a further set of exceptions, made under section 8(6) and set out for the Court of Session in rule 41B.2(2) of the Rules of the Court of Session, with equivalent provision for the sheriff court and the Sheriff Appeal Court. Expenses may be sought against a pursuer who fails to beat a tender, who delays unreasonably in accepting one, or who abandons the action or the appeal. Where the award is made on the tender ground, rule 41B.3 limits your liability to the applicant's expenses incurred after the tender was made and, in any event, to seventy five per cent of the damages awarded to you. On that ground the exposure is bounded, and it comes out of the award rather than out of your house. The section 8(4) conduct exceptions carry no such ceiling, which is why they are the ones to take seriously.

Rejecting a reasonable tender is therefore the one decision in an injury action that can cost you real money, and it is a decision you make on your solicitor's advice. What happens if I lose my case sets out the mechanics in detail.

If your claim is not an injury claim

The fifty per cent cap in regulation 2(5) is the figure that applies to most non-injury work, and three things change at once. The percentage doubles. The statutory protection in section 6, which makes outlays the solicitor's problem and keeps future loss out of the calculation, applies only to injury claims and so falls away. And qualified one way costs shifting does not exist. A no win no fee arrangement on a commercial or estate dispute is a genuinely different product, and it is usually paired with an insurance policy for exactly that reason.

One category is closed altogether. Regulation 3 of SSI 2020/110 provides that a damages-based agreement, meaning a success fee agreement where the fee is determined by reference to the amount of financial benefit obtained, must not be entered into in connection with a matter which is or may become the subject of family proceedings, as defined by section 135 of the Courts Reform (Scotland) Act 2014. Regulation 3(3) preserves other types of success fee agreement, so a fee uplift on time spent is not caught, but nobody may take a percentage of a divorce settlement in Scotland.

After the event insurance, and whether you need it

An after the event policy covers the adverse expenses and, sometimes, the outlays if the case fails. In Scotland the case for one in a straightforward injury claim is much weaker than it is south of the border, because section 6(2) has already removed the outlay risk and section 8 has already removed most of the adverse expenses risk. What the policy realistically covers is the residue: the tender exception, and the section 8(4) conduct exceptions.

Two points to hold on to. Section 6(3) expressly excludes insurance premiums from the outlays your solicitor must bear, so the premium can be charged to you, and it will usually come out of your damages on top of the success fee. And the premium is not recoverable from the other side. Ask what the policy costs, what it actually covers, and whether the firm receives anything in connection with placing it.

Legal aid was not abolished here

The single most damaging thing an English page does to a Scottish reader is tell them legal aid is gone. It is not. Civil legal aid in Scotland is available for proceedings in the courts listed in Part I of Schedule 2 to the Legal Aid (Scotland) Act 1986, and unavailable only for the categories listed in Part II of that Schedule, which covers matters such as defamation, election petitions and simplified divorce applications. Personal injury is not on the excluded list. Neither is clinical negligence.

That matters most in medical cases. A clinical negligence claim needs expert reports before anyone can say whether it is worth running, and those reports are expensive enough that firms decline cases they cannot fund. Legal aid, where a person qualifies, pays for that investigation. Eligibility turns on your financial position and on the merits of the case, and contributions are common; the Scottish Legal Aid Board publishes the tests and an eligibility estimator. Our guide to legal aid in Scotland goes through it, and medical negligence claims in Scotland deals with the clinical side.

Where legal aid is in place, note that section 3(3) of the 2018 Act makes the solicitor's entitlement to retain recovered expenses subject to section 17(2A) of the Legal Aid (Scotland) Act 1986, which requires expenses recovered to be paid to the Board. Legal aid and a success fee agreement are alternatives, not a stack.

Why the English pages do not apply

Three differences, and all three cost money if you get them the wrong way round. The English instrument is a conditional fee agreement, under which the solicitor charges a percentage uplift on their own fees, or a damages-based agreement, which takes a percentage of damages; the Scottish instrument is a success fee agreement, and the statutory caps described above are Scottish caps with no English equivalent. The English caps are calculated on a different basis and the numbers are not the ones on this page, so they should not be applied here. And the abolition of legal aid for most injury and clinical negligence work in England and Wales was a reform of English law which did not touch Schedule 2 to the Legal Aid (Scotland) Act 1986.

The vocabulary differs too, which is how you can tell quickly whether a page was written for you. Scotland has pursuers and defenders, not claimants and defendants; expenses, not costs; a tender, not a Part 36 offer; and solatium, not general damages. Our guide to English legal words that do not exist in Scotland collects them.

The pre-action protocol, for smaller claims

Most injury claims never reach a court. Since 28th November 2016 a compulsory pre-action protocol has governed the correspondence stage, introduced by the Act of Sederunt (Sheriff Court Rules Amendment) (Personal Injury Pre-Action Protocol) 2016, SSI 2016/215. It applies where the claimant reasonably estimates that the total liability value of the claim, exclusive of interest and expenses, does not exceed £25,000, and it does not apply to claims arising from alleged clinical negligence, alleged professional negligence, or disease. The protocol does not apply where the accident or other circumstance giving rise to liability occurred before 28th November 2016, or where the claimant is not represented by a solicitor. The £25,000 figure fixes the scope of the compulsory protocol rather than an absolute ceiling: under paragraph 4, where the estimate rises above it the claimant must tell the defender, and the parties may agree to carry on following the protocol voluntarily.

The protocol prescribes what each side must send and when, and it fixes the expenses payable to the solicitor at a set figure plus a percentage of the damages agreed, with damages and protocol expenses to be paid within five weeks of settlement. The fixed element was set at £546 when the protocol was made, and it has not been uprated since: the only instrument that has amended the protocol, SSI 2016/229, left the fee untouched. Nearly ten years of inflation have passed through that figure untouched, which is one reason firms are more selective about small claims than they used to be, and one reason a claim worth a few hundred pounds can be difficult to place at all.

You have three years, and the clock is not always where you think

An injury action in Scotland must be commenced within three years, under section 17 of the Prescription and Limitation (Scotland) Act 1973. The three years run from the date of the injury or, if later, the date on which you first became aware, or could reasonably have become aware, that the injury was sufficiently serious to justify bringing an action, that it was attributable to an act or omission, and that the defender was responsible. Time does not run while the injured person is under legal disability by reason of nonage or unsoundness of mind, so for a child the period does not begin until the sixteenth birthday. The court has a discretion under section 19A to allow a late action where it is equitable, but it is a discretion and not an entitlement, and it is not something to plan around.

Funding and timing interact. A firm asked to take a case on a success fee agreement three months before the limitation date is being asked to bear the whole outlay risk with no time to investigate, and will usually decline. If you are near the end of the three years, say so in your first sentence.

The questions worth asking before you sign

The percentage is the least useful question, because almost everyone answers it the same way. The questions that separate one offer from another are these. What percentage, and is that inclusive of VAT? Is it charged on the whole award, or is future loss excluded as section 6 requires? If the other side pays my expenses, do you keep those as well as the success fee? Is there an insurance premium, what does it cost, and what does it cover? What happens if I reject a tender against your advice? And who, by name of firm rather than of individual, will actually be running the file?

The answer to the last one matters more than the funding arrangement does. A twenty per cent success fee charged by a firm that values the claim properly and settles it for what it is worth leaves you better off than a ten per cent fee charged by a firm that closes the file early. Our note on how to choose a solicitor in Scotland takes that further, and how much compensation will I get explains how the valuation itself is built.

Where success fee agreements turn up

The bulk of this work is injury work: injury claims generally, road traffic accidents, accidents at work, industrial disease and asbestos, and clinical negligence, where the tiered caps and section 8 both apply. Outside injury, the fifty per cent cap and the absence of costs protection govern, which is the position in professional negligence claims that are about money rather than health. Group proceedings are funded differently again, and in Scotland they remain opt-in only, so nobody is swept into one without applying to join.