The regulation imposes strict requirements on lawyers and those who wish to rely on DBA to ensure that the terms of the agreements themselves contain important information ensuring transparency for potential parties to the trial. If an agreement does not meet the requirements, it can no longer be implemented. For the first time, Scottish lawyers can enter into damages-based agreements (DBA) and speculative royalty agreements (ASA). DBA is an agreement whereby legal fees are calculated as a percentage of the damage if they win, but that no charge or lower royalty is payable in the event of a loss of a case. In an AFL, clients are only required to pay legal fees if the dispute is successful. If they are not successful, clients may continue to be liable for their opponents` expenses and, in some cases, pay their lawyer a lower fee. Until now, results-related agreements, also known as conditional pricing agreements or conditional pricing agreements proposed by lawyers in Scotland, have been limited to speculative royalty agreements which, if successful, are subject to an increase in the levy. These additional costs are normally calculated on the basis of the royalty element of the court costs or calculated as an increase in the lawyer`s hourly rate if successful and not as a percentage of the damage awarded in the case. The legislation follows an audit published in September 2013 by former Sheriff`s Chief James Taylor, in which Scotland was advised to follow in the footsteps of England and Wales by authorising “no win no fee” agreements.
Initially set up in 2018 by the Professional Practice Committee and the Civil Justice Committee to develop a style-based success fee agreement that will be submitted to the Scottish Government for review. The agreement was then replaced by the Scottish Government`s consultation on the success fee agreements. The working group responded to the consultation and continued to work closely with the Scottish Government, which contributed to the draft regulations. The task force has worked hard to reconcile the interests of the profession while protecting the public interest. Since the completion of the regulations, the working group has amended the previous draft agreement on success fees to ensure that it complies with the 2020 provisions. The regulations offer Scottish lawyers the opportunity to reach an agreement either through a speculative royalty agreement or through an agreement on damages. In the case of speculative royalty agreements, if a right is successful, they may ask the opponent, in addition to reimbursement of the costs, to increase these costs to be paid from the damage suffered by the customer.