Pre-action protocols for Scotland
England and Wales have operated pre-action protocols since the Civil Justice reforms were introduced in 1996, on the recommendation they would "build on and increase benefits of early but well-informed settlement which genuinely satisfied both parties in dispute." Until now, no equivalent provision has existed in Scotland. With effect from 1 January, however, a pilot scheme will be introduced north of the border, applicable on a voluntary basis to accident claims up to a value of £10,000.
Background
The origin of this development lies in recent modifications to the Scottish fee structure for claims settled before litigation. Originally, such fees were quantified with reference to a scale fixed by the Law Society of Scotland, representing a percentage of the settlement figure. However, in January 2004 the Law Society of Scotland - without consultation with the liability insurance market operating there - sought to increase this by introducing an 'investigation fee'.
In effect this inflated the fee payable on a settlement over £1500 by approximately £625. Perhaps not surprisingly, the liability insurance market indicated that it was not prepared to accept this substantial rise and stalemate ensued. The prospect of litigation surrounding fee disputes prompted insurers to recognise this as an opportunity to discuss the introduction of PAPs.
Over the last two years, a working party from the Law Society of Scotland has been in discussion with the Forum of Scottish Claims Managers, which represents virtually all of the principal insurers writing liability business in the Scottish market. Insurers indicated that they would be prepared to pay an increased fee in return for the introduction of a voluntary PAP and the terms of that protocol have now been agreed by both sides (See Appendix 1 "Key features"). (See Appendix 2 Hyperlink "Pre-action Protocol:Joint Statement which reflects the philosophy behind the PAP, and relevant fee structure on which it operates").