Three separate fears, and only one of them survives

People fold three different risks into one worry. The first is the solicitor's own fee. Under a success fee agreement in an injury claim there is no fee if there is no financial benefit; that is what the agreement is, as defined by section 1 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018.

The second is the outlays: the medical reports, the expert evidence, the cost of recovering records, the court dues. Section 6(2) of the 2018 Act requires the agreement to provide that you are not liable to make any payment, including outlays, apart from the success fee, regardless of whether any damages are obtained. If the claim fails, those outlays are the firm's loss, not a debt of yours. Section 6(3) carves out insurance premiums alone.

The third is the other side's expenses, and that is the one worth understanding properly.

Qualified one way costs shifting

The ordinary rule in Scottish civil litigation is that expenses follow success: the losing party pays a judicially assessed contribution to the winner's expenses. Section 8 of the 2018 Act switches that rule off in one direction for one category of case.

Section 8(1) sets the conditions. The section applies in civil proceedings where the person bringing them makes a claim for damages for personal injuries, or for the death of a person from personal injuries, and where that person conducts the proceedings in an appropriate manner. Where it applies, section 8(2) provides that the court must not make an award of expenses against that person in respect of any expenses which relate to the claim or to any appeal in respect of it. The verb is mandatory. It is not a discretion the court exercises in your favour.

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, which provides that it applies to claims commenced on or after that date. The court rules that carry it were made by the Act of Sederunt (Qualified One-way Costs Shifting) 2021, SSI 2021/226, which came into force on the same day and applies to first instance proceedings commenced on or after it, and to appeals arising from them. A case raised before 30th June 2021 does not have the protection.

The three conduct exceptions

The protection is qualified, and section 8(4) says exactly how. A person does not conduct proceedings in an appropriate manner if that person, or that person's legal representative, does any of three things.

The first is to make a fraudulent representation or otherwise act fraudulently in connection with the claim or the proceedings. The second is to behave in a manner which is manifestly unreasonable in connection with the claim or the proceedings. The third is otherwise to conduct the proceedings in a manner that the court considers amounts to an abuse of process. Section 8(5) provides that, for the fraud limb, the standard of proof is the balance of probabilities, not the criminal standard. That is a lower threshold than most people assume when they hear the word fraud in a courtroom.

Two features of the drafting deserve attention. The exceptions attach to the conduct of your legal representative as well as to your own, so a case run badly can cost a client who did nothing wrong. And “manifestly unreasonable” is a standard rather than a list. The word manifestly is doing real work: ordinary unreasonableness, a weak case, an optimistic valuation or a claim that simply fails on the evidence is not enough to remove the protection. Exaggerating an injury, or maintaining a position after it is plainly untenable, is a different matter.

The tender exception, and the seventy five per cent ceiling

Section 8(6) allows further exceptions to be made in rules of court, and they have been. For the Court of Session they sit in Chapter 41B of the Rules of the Court of Session 1994, inserted by SSI 2021/226, with equivalent provision for the sheriff court and the Sheriff Appeal Court. Rule 41B.2(2) permits another party to apply for expenses against a pursuer on three grounds beyond those in the Act: failure by the pursuer to obtain an award of damages greater than a sum offered by way of tender; unreasonable delay in accepting a sum offered by tender; and abandonment of the action or the appeal by the pursuer.

A tender is the Scottish equivalent of a formal offer to settle. It is lodged in process, the amount is not disclosed to the judge deciding the case, and it puts the pursuer to an election: accept it, or beat it at proof. A pursuer who rejects a tender and then recovers less has, in the court's eyes, caused every day of litigation after that date unnecessarily.

The exposure is nonetheless bounded. Where expenses are awarded on the tender ground, rule 41B.3 limits the pursuer's liability to the applicant's expenses incurred after the tender was made, and, in any event, to seventy five per cent of the amount of damages awarded to the pursuer. Where more than one party applies, the award is apportioned between them. An application is made by motion in writing under rule 41B.4, at any time before the final interlocutor dealing with expenses.

Abandonment, and stopping a case that is going nowhere

The third rule 41B.2(2) ground is abandonment. A pursuer who abandons an action is not automatically liable, but the door to an application is open, and the court then decides. This matters where a case turns out to be weaker than it looked, which happens most often in clinical negligence, where the answer frequently depends on an expert report that does not exist when the action is raised. The practical protection is not the rule; it is being advised early and honestly about whether to continue. Discuss the tender and abandonment position with your solicitor before either arises, not afterwards.

If your claim is not an injury claim, none of this applies

This is the point on which most people are misled, and it is not a matter of degree. Section 8 applies only where the claim is for damages for personal injuries or for a death caused by personal injuries. It does not apply to a contract dispute, a claim about a badly drafted will, a boundary dispute, a claim against a surveyor or an accountant, a debt action or an employment tribunal claim. In all of those, a pursuer who loses faces the ordinary rule that expenses follow success, and the exposure is open-ended in a way that an injury claim's is not.

A success fee agreement does nothing about it. The agreement governs what your own solicitor charges you. It has no effect whatever on what a court may order you to pay the other side. The two things are commonly confused because the phrase “no win no fee” sounds as though it covers both, and it does not. If a firm offers you a percentage arrangement on a non-injury claim, the questions are what happens to the other side's expenses if you lose, whether insurance is available, what it costs and what it excludes. Our note on claiming against a professional who got it wrong deals with the commonest example.

Group proceedings are different again and are funded on their own terms. Scottish group proceedings remain opt-in only, so nobody is joined to one without applying; how group proceedings work explains the mechanics.

Most claims never reach the stage where expenses can be awarded

Expenses are awarded in court proceedings. The great majority of injury claims settle in correspondence and never become an action, and a claim that is investigated and then not pursued produces no award of expenses against anybody, because there are no proceedings in which to make one. For smaller claims that correspondence is governed by the compulsory protocol introduced by the Act of Sederunt (Sheriff Court Rules Amendment) (Personal Injury Pre-Action Protocol) 2016, SSI 2016/215, which applies where the claimant reasonably estimates that the total liability value, exclusive of interest and expenses, does not exceed £25,000, and which excludes claims arising from alleged clinical negligence, alleged professional negligence and disease. It does not apply either 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.

If you have legal aid, there is a second layer of protection

Civil legal aid is available in Scotland for personal injury and clinical negligence, because neither is among the excluded categories in Part II of Schedule 2 to the Legal Aid (Scotland) Act 1986. Where a person is legally assisted, section 18(2) of that Act provides that liability under an award of expenses must not exceed the amount which the court considers reasonable for that person to pay, having regard to all the circumstances including the means and conduct of all the parties.

Section 18(3) goes further and puts specific assets beyond reach: a legally assisted person's house, clothing, household furniture and the tools of their trade or profession are neither taken into account in assessing means nor subject to diligence in connection with such an award. Where the fear is losing the family home, that is the provision to read. Legal aid in Scotland sets out how to find out whether you qualify.

Where after the event insurance still earns its place

Between section 6(2), which removes the outlay risk, and section 8, which removes most of the adverse expenses risk, the residual risk in a Scottish injury claim is narrow: the conduct exceptions, and the tender exception with its seventy five per cent ceiling. A policy is still worth considering on a case likely to involve a difficult tender decision, and it becomes close to essential on any non-injury claim, where nothing else stands between you and the other side's account. Remember that the premium may lawfully be charged to you under section 6(3), that it will normally come out of the damages, and that it is not recovered from the other side.

So what do you actually lose

On a straightforward Scottish injury claim that fails, and where the case has been run properly: no success fee, because there is no financial benefit; no outlays, because section 6(2) puts them on the firm; and no award of expenses against you, because section 8(2) prohibits it. What you lose is the time, the disruption, and any insurance premium already incurred. That is a real cost, and it is a smaller one than the fear that usually prevents people from asking in the first place.