In October 2024, the Scottish Civil Justice Council issued a call for evidence about the potential introduction of an ‘opt-out’ procedure for group proceedings in Scotland. The deadline for responses was 23 January 2026. The effects of opt-out procedure for group proceedings, if implemented, will be wide-ranging. It is likely to have a substantial effect on the frequency and nature with which litigation funding is employed in group proceedings in Scotland.
What is litigation funding?
Litigation funding, or ‘’third party’’ funding, as outlined in our previous blog on the topic, is a form of arrangement whereby a third party, who has no involvement in the dispute itself, agrees to finance all or a proportion of the legal costs associated with the litigation in return for a fee payable from the proceeds awarded to the litigating party.
It can provide parties with the financial security to pursue litigation claims, providing both the party and the court with reassurance that the costs of the litigation will be met and decreasing the risk of financial loss in the event that claims are unsuccessful.
How does litigation funding work in group proceedings?
In group proceedings, parties must first apply to the court in order to be declared a representative party, and part of the court’s assessment of whether the intended RP ought to be appointed is whether they have demonstrated competence to litigate the claims properly, including whether they have the ‘’financial resources to meet any expenses awards’’. Funding can be secured to cover not only the RP’s expenses, but any expenses awards they may be liable for in the event they are unsuccessful.
Therefore, acquiring a litigation funder at the outset of a claim can be highly beneficial for the RP, who is likely to represent a group of individuals that may not have sufficient finances set aside to cover what is often a lengthy, complex and costly process.
Rule 26A.7(2)(f) of the Rules of the Court of Session 1994 (as amended by the Act of Sederunt (Rules of the Court of Session 1994 Amendment) (Group Proceedings) 2020) provides that when parties to group proceedings seek to demonstrate that they have the financial competence to meet any expenses awards, the details of the funding arrangement do not need to be disclosed.
However, under section 10 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018, which provided the statutory framework for group proceedings in Scotland, if a party to group proceedings is receiving third party funding, this party must disclose to the court:
• the identity of the funder and any intermediary (if known to the party), and;
• the nature of the assistance being provided.
Further, if the funder has a financial interest in respect of the outcome of the proceedings (and a success fee arrangement under the 2018 Act has not been agreed):
• the party receiving the assistance must disclose that interest to the court once the substantive issues in dispute in the proceedings have been decided or otherwise resolved, and;
• the court may make an award of expenses against the funder and any intermediary.
Section 10 of the 2018 Act is not yet in force but is likely to come into force in the near future.
The use of litigation funding is likely only to increase as more group proceedings are brought and the value of claims increases.
Impact of the proposed opt-out regime
Even though the 2018 Act allows for both opt-in and opt-out regimes, only the opt-in procedure has been implemented. ‘Opt-in’ procedure is where the individuals must take proactive steps if they wish to be involved in proceedings, whereas with opt-out procedure individuals deemed to form part of the relevant group will automatically be part of the group proceedings unless they opt-out.
However, in October 2024, the Scottish Civil Justice Council issued a call for evidence about the potential introduction of an ‘opt-out’ procedure for group proceedings in Scotland, in which interested parties could submit their views on the proposed change. The call for evidence closed on Friday 23 January 2026, and so we now await the outcome of the consultation. See our series of blogs for further information on SCJC’s consultation and its potential impact on the group proceedings landscape in Scotland:
• Call for evidence on effectiveness of UK opt-out collective actions in competition cases | Brodies LLP
• Opt-out class actions: huge changes on the horizon in Scotland? | Brodies LLP
• Group Proceedings in Scotland: Key Risks and the 2026 SCJC Deadline
The effects of opt-out procedure if implemented will be wide-ranging and the full scope of its impact remains to be seen. However, it is likely to have a substantial effect on the frequency and nature with which litigation funding is employed in group proceedings in Scotland.
Principally, by automatically including all relevant individuals in group proceedings, the size of claimant groups and, in turn, the value of claims made under group proceedings will significantly increase.
As a result, litigation funders will be more drawn to support claims in Scotland, which will significantly amplify the risk to businesses and other organisations facing group proceedings claims that the claimants would not have otherwise been able to bring without financial support. Once proceedings are brought, it may also make settling or successfully defending the claims more difficult, as claimants will be less concerned with their litigation budget and more able to employ means to robustly present their claims (i.e. instructing more senior or experienced counsel and legal advisors, undertaking more sophisticated evidence-gathering processes and appealing unfavourable decisions).
Conclusion
The SCJC’S consultation and the potential introduction of the opt-out regime marks a pivotal time in the evolution of the group proceedings process in Scotland, the outcome of which will shape the conduct of group proceedings going forward.
Businesses and other organisations should keep themselves informed and up to date on the developments in this area (and be alert to how the funding landscape in group proceedings could be significantly altered), so that they are prepared and can respond accordingly if the opt-out regime is introduced. Brodies will also be reporting in detail once the outcome of the consultation is announced and will be able to give businesses a steer on how they may be impacted.
Should you wish to discuss the potential impact of the introduction of an ‘opt-out’ procedure in Scotland, in relation to litigation funding and beyond, please contact Craig Watt or your usual Brodies contact.
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