Blog: Civil Litigation Hokey Cokey - Why This “Small Change” Could Carry Big Economic Risks for Scotland
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
Blog: To field our best team we need a more diverse squad
As the football transfer deadline day passed last week, many teams made key appointments to their squads. Player’s data and match statistics underpinned transfer decisions. It’s no different in business: data matters and should affect the choices being made.
Susan Murray’s latest blog.
Blog by Susan Murray, the David Hume Institute
6th September 2021
Image credit: Photo by Sandro Schuh free from Unsplash 06.09.2021.
As the football transfer deadline day passed last week, many teams made key appointments to their squads. Player’s data and match statistics underpinned transfer decisions. It’s no different in business: data matters and should affect the choices being made.
However, new data from the David Hume Institute shows that business leaders are limiting Scotland’s potential by not prioritising diversity in their top decision makers. Diversity of thought increases resilience, productivity and innovation as well as improving risk management. Scotland’s top team is missing out.
The research investigated investment and angel investment leaders in Scotland. Scotland’s investment companies have less diversity at the top than companies elsewhere in the UK. Although angel investment leaders are more diverse than the bigger companies.
The data on who is, and isn’t securing business investment and who can access the resources to grow is shocking - and again, limiting potential.
The data shows those with resources and connections are more able to reach the top. This limits the pool of top decision makers and risks group-think - a risk Scotland should be aware of after the last financial crisis.
Business and investment leaders lag behind other sectors, and are not responding to the data linking diversity of thought with successful outcomes.
So why isn’t change happening faster?
Studies from around the world show overt and covert bias is limiting the pool - so this is a great opportunity. Awareness is the first step - just like players on a football pitch, knowing your own statistics helps improvement. Leaders have the power to champion and deliver change in Scotland.
Three out of ten of the top 50 business leaders also hold positions on other boards, meaning they can influence change beyond their own companies. Similarly, the power to decide who gets investment is in the hands of the investment leaders.
Why does this matter? Improving gender diversity alone could add up to £250 billion of new value to the UK economy, if women’s new businesses were invested in and scaled up at the same rate as men’s. If women’s participation rates matched men’s there would be the potential of c.35,000 more direct jobs in the Scottish economy.
The leaders have the power to bring change. The country has big challenges ahead and leaders need to rise to those challenges. Scotland needs its top team on the pitch.
The IOD conference last week challenged Scotland’s Directors to think about the IPCC code red: “the costs of inaction on climate change are greater than the cost of action. There needs to be a bias towards change rather than a bias against it.”
The same is true of diversity of thought. The benefits are widely known and there are costs to inaction. It's time for Scotland’s top business and investment leaders to bring more breadth to their squad and champion change.
This piece was originally published in The Times on 6th September.
New research shows business and investment leaders are limiting Scotland's potential
The David Hume Institute is challenging business and investment leaders to embrace change to realise the benefits of greater diversity in top leadership roles.
Read more here.
Press release from the David Hume Institute
6th September 2021
Image credit: Photo by Annie Spratt free from Unsplash 06.09.2021.
The David Hume Institute is challenging business and investment leaders to embrace change to realise the benefits of greater diversity in top leadership roles.
Scotland’s leading independent think tank, the David Hume Institute, today publishes new research finding a shocking lack of diversity in the top 200 business and investment leaders, less than in previous sectors analysed by the Institute.
Faster growth in diversity at the top level is needed if Scotland is going to benefit from a wider spectrum of thought leadership to maximise the country’s ability to overcome challenges such as increasing productivity, innovation and improving risk management.
The research analysed the leaders of top businesses, investment companies, angel investors and family businesses in Scotland. The analysis found:
There are still more leaders called John than there are female leaders (7% John and 5% female)
One in four (26%) have held positions at four services companies (Accenture, EY, McKinsey, PwC)
2 out of 3 (65%) of investment company leaders attended an elite university with 1 in 5 of these attending Oxford or Cambridge. This compares to 49% of Angel Investment leaders who attended an elite university.
9% of investment company leaders are female - falling behind the UK average (13%)
1 in 5 (20%) of angel investor leaders are female - higher gender diversity than others in the business sector
With 31% of the top business leaders also holding positions on other boards, this narrow pool of decision makers has significant influence beyond their own companies.
Understanding the diversity of who is making investment decisions in Scotland is critical as access to capital is cited as one of the barriers for increasing entrepreneurs from female and minority backgrounds.
The research also found
Three out of ten (31%) top leaders have postgraduate qualifications with 39% of these are MBAs.
Postgraduate education is becoming the norm for top leaders, so decision makers need to be mindful of who has access to postgraduate education if they want to reap the benefits of diversity of thought.
Susan Murray, director of the David Hume Institute, says:
“The David Hume Institute’s research clearly shows limited diversity of Scotland’s top business and investment leaders. Scotland needs its business leaders to not only champion diversity across their organisations. They need to be open to more immediate change at the most senior level to reap the benefits of more diverse thinking now.
“Currently those with resources and connections are more able to reach the top. This limits the pool of top decision makers meaning organisations are risking group-think. Diversity of thought helps risk analysis, innovation and productivity.
“Every business leader must choose to prioritise diversity of thought as we recover from the pandemic if Scotland’s businesses are to increase productivity and resilience to future risks. For Scotland to be in the Champions’ League for business and investment we need a more diverse squad.”
Image credit: Sharing thumbnail image photo by Ross Sneddon free from Unsplash on 06.09.2021.
Blog: Are we picking the right top team?
Have you ever looked around a meeting room and noticed lots of similar people? The David Hume Institute’s latest research shows that the top leaders in Scotland do not reflect the diversity of the country.
by Lucy Higginson, David Hume Institute
8th October 2020
Have you ever looked around a meeting room and noticed lots of similar people? The David Hume Institute’s latest research shows that the top leaders in Scotland do not reflect the diversity of the country.
Diversity of thought and different life experiences can help problem solving and the ability of organisations to face shocks and build sustainably.
Lack of diversity in leaders is a threat which can lead to groupthink. Investment companies like Baillie Gifford and Blackrock are increasingly analysing leadership diversity because of the links to increased profit and innovation.
If I am honest, I thought the data would have shown more change in the five years since the Institute first undertook research with the Social Mobility Commission.
We know work by organisations like the ICAS Foundation and the Law Society of Scotland is broadening entrants to their professions. Changing the Chemistry has been championing diversity of thought on boards since 2012 and the National Advisory Council on Women and Girls is now in its third year. Initiatives like Pass the Mic and Equate Scotland’s speaker lists are helping to broaden the voices heard in the media.
But this week the issue at the top of the legal profession was highlighted by Supreme Court Judge Lord Reed’s comments on the lack of diversity in our top courts. And, last month the experience of barrister Alexandra Wilson highlighted unconscious bias in the legal profession in England. Law along with Business were the two sectors we found least diversity in the top leaders in Scotland.
Change is happening but it needs to happen faster at the top.
At the current rate, I will be retiring before the top leaders in Scotland are representative of the population.
Why does this matter?
We have big challenges on the road ahead. The aftermath of Covid-19 and the immediacy of climate change means business as usual is not an option. There is no time for fixed mindsets, leaders need to be open to being challenged. Digital disruption means many new opportunities but there will also be risks. We need every leader to be on their a-game.
The challenges ahead mean Scotland needs all of our current top leaders to actively champion diversity and proactively provide the opportunities to ensure faster progress for everyone’s benefit.
It is time for deeds not words.