Blog: Civil Litigation Hokey Cokey - Why This “Small Change” Could Carry Big Economic Risks for Scotland
22nd April 2026
At first glance, it might look like a minor procedural tweak — a minor bit of legal “hokey cokey”. A switch from opt-in to opt-out in civil litigation. In, out, to shake it all about.
Photo credit: Pierre Goiffon free licence on Unsplash 22.4.26
But this is not an incidental change. It has the potential to reshape Scotland’s legal and economic landscape in ways that deserve far more scrutiny than it is currently getting.
A change that could slip through unnoticed
Early in the next Scottish Parliamentary term, this issue is likely to land on the desks of newly elected MSPs — possibly as a Scottish Statutory Instrument. That matters, because such instruments can become law quickly, with limited debate.
At a time when many MSPs will be new to Parliament, hiring staff and navigating steep learning curves, there is a real risk this proposal gets dismissed as a technical adjustment.
It isn’t. It is a structural shift with far-reaching consequences.
What’s actually being proposed?
The Scottish Civil Justice Council is exploring changes to group proceedings under the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018.
At the heart of this is a move toward a US-style opt-out model for class actions.
Currently, individuals must actively choose (opt in) to be part of a group legal claim. Under the proposed system, people would automatically be included unless they take action to opt out.
That might sound consumer-friendly — more people included, more access to justice. But the reality is far more complicated.
Why it matters: scale changes everything
An opt-out system dramatically increases the scale of litigation. Suddenly, claims can encompass hundreds of thousands — even millions — of people, most of whom will not even know they are part of a case.
This creates a very different legal ecosystem — one that critics argue risks prioritising volume over value, and process over outcomes.
The concern: who really benefits?
Supporters frame mass litigation as a tool for consumer justice. But growing evidence from other jurisdictions suggests the biggest winners are often not consumers — but lawyers and litigation funders.
These cases are typically financed by third-party funders, many of them offshore investment vehicles. Their returns come from a share of settlements or damages.
That raises a critical question:
how much of any compensation actually reaches consumers — and how much is extracted along the way?
As Seema Kennedy from Fair Civil Justice puts it:
“Large mass legal cases claim to provide access to justice for consumers… But they only work if they deliver the intended results — and increasingly the evidence suggests that they are not working.”
Even under “no-win, no-fee” arrangements, consumers ultimately pay — through deductions from settlements and damages. Research in the US shows the average percentage of settlements reaching the consumer is less than 10%.
A system with limited transparency
One of the more troubling aspects is the lack of oversight or regulation in the litigation funding sector.
Consumers often:
● Lack clear information about risks
● Sign confidentiality agreements
● Have limited visibility of who is funding their case and on what terms
When things go wrong, the consequences can be severe — as seen in past scandals where claimants were left exposed to unexpected legal costs.
This is not a theoretical risk. It is a practical one.
Economic consequences: beyond the courtroom
The implications extend well beyond individual claims.
Business groups have long warned that introducing US-style mass litigation could:
● Deter inward investment
● Increase the cost of doing business
● Divert capital away from innovation, jobs, and growth
Colin Hutton, of International law firm CMS describes the proposal as:
“The most significant development in Scottish civil litigation in decades… with implications that reach far beyond the courtroom.”
International comparisons reinforce the concerns. Evidence from countries such as Portugal and the Netherlands suggests opt-out regimes can trigger a surge in litigation — often targeting the public sector as well as private companies.
The risk of becoming a litigation outlier
If Scotland adopts this model while other parts of the UK take a more cautious approach, it risks becoming a legal outlier.
That matters for competitiveness.
Global businesses — which bring jobs, tax revenue, and investment — factor legal risk into decisions about where to operate. A more litigious environment increases uncertainty and cost.
Over time, that can shift investment elsewhere.
The cost to the wider economy
The broader economic impact could be significant.
Research from the European Centre for International Political Economy warns that unchecked growth in mass litigation could cost the UK economy up to £18 billion.
Small and medium-sized enterprises are particularly exposed:
● They lack the resources to absorb prolonged legal battles
● They may settle weak claims simply to avoid costs
● Capital is diverted from growth into legal defence
In the United States — often cited as a cautionary example — SMEs bear more than half the cost of litigation, amounting to hundreds of billions annually.
More litigation ≠ better outcomes
There is a broader policy question here.
More litigation does not necessarily mean better consumer outcomes. In many cases, it leads to:
● Higher prices (as businesses pass on legal costs)
● Slower access to redress
● Overburdened courts
If the goal is to improve consumer protection, there may be more effective routes:
● Stronger regulation
● Better ombudsman services
● Faster, more accessible complaints systems
A decision that deserves attention
This is not just a legal technicality. It is a decision about the kind of economy Scotland wants.
An opt-out system could:
● Expand access to claims — but dilute individual benefit
● Attract large-scale litigation — but deter business investment
● Promise consumer justice — but shift value to offshore funders
That is why this “hokey cokey” matters.
Because once Scotland steps into this model, stepping back may not be so easy.
The David Hume Institute is partnering on an event in June to discuss this further with CMS, CBI Scotland, Fraser of Allander Institute and Fair Civil Justice.
New to this subject?
Listen to BBC Radio 4, File on 4 Investigates: No Win No Fee… No thanks?
Sharing thumbnail image credit: Photo by Tingey Injury Law Firm downloaded free from Unsplash on 22.4.26
