Simon Catto

Over the course of the last decade, the law has been updated to provide parties with greater flexibility in funding disputes and managing costs.

The market has seen the development of new and increasingly sophisticated forms of alternative pricing arrangements, third party funding models and insurance products.

Simon Catto, head of dispute resolution in Scotland at Addleshaw Goddard, said: “This new legislation goes much further and aligns Scottish law with the position in England, where litigation funding has been a massive success story.”

Mr Catto added: “One of the most important points to consider at the outset of a dispute is cost. The costs of taking legal action always need to be weighed up against the benefits. During the course of any dispute, costs pressures can create tactical advantages and disadvantages for parties.

“In some cases, cost pressures can prevent parties from taking action in the first place. This legislation allows our clients to allocate risk effectively to suit their business needs.”

The legislation follows on from the recent case of A & E Investments where a “success fee” was held to be unenforceable because it was calculated by reference to the sum recovered in damages.

The court was bound to make this decision but it also pointed to a lack of flexibility in the law. The key point is that the 2018 act now means that legal fees can be paid out of monetary awards paid to successful parties.