Irwin Mitchell denied £105k costs after pre-Jackson switch

Topics: Costs, fees and funding,Courts business

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The High Court has denied costs to a claimant firm that tried to switch funding methods in advance of the Jackson civil litigation reforms coming into force.

District Judge Besford said Irwin Mitchell was not entitled to additional liabilities coming to more than £105,000 after persuading a clinical negligence claimant to switch from legal aid funding to a conditional fee agreement in March 2013 – weeks before recoverability was abolished under the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO).

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The defendant, the NHS Litigation Authority, sought to argue that the switch was unreasonable and the additional liabilities should be disallowed.

Besford agreed the decision was taken on ‘erroneous promises’ and that Irwin Mitchell had failed to show it was appropriate or necessary.

‘The solicitors have produced no evidence either by way of file notes, copy letters or even a witness statement from the client as to the advice tendered,’ said the judge. ‘In my judgment, the decision to switch was not self-evident or transparent.’

Besford said the claimant was ‘abandoning’ a 10% uplift on general damages, a sum of around £28,000, by accepting a CFA. This was done without being advised of the availability of the uplift.

In Yesil v Doncaster NHS Trust, Irwin Mitchell sought to argue that its failure to give material advice was not relevant to the consideration whether the decision to switch was reasonable.

But Besford said the client was entitled to have some understanding of their options, even if the firm advising them ‘leans’ a certain way.

‘It is inconceivable that a client would not consider the option of an additional 10% uplift on general damages a material factor,’ said Besford.

‘The omission to raise this factor, even if the claimant immediately rejected it, seriously calls into question the adequacy of the advice given.’

In a statement the NHSLA said it is increasingly contesting additional costs liabilities where clients switched funding methods prior to April 2013. This is the third time the authority has defeated a costs claim of this sort.

An NHSLA spokesman said: ‘It is disappointing that we continue to receive substantial bills for additional liabilities in these circumstances which means that it is necessary for us to challenge those bills at court.’

Irwin Mitchell said in a statement: ‘In a short timeframe we acted in the best interests of a specific group of clients in order to ensure they were able to pursue their claims to trial fully protected from any costs liabilities under a “no cost” pre-LASPO CFA.

‘This protected them from changes arising from LASPO and the vagaries and uncertainties of an increasingly complex and constrained legal aid system by ensuring their cases would be best placed to proceed under the new legal framework. We cannot comment on individual cases due to the ongoing appeals process.’

Readers' comments (29)

  • Prof neg claim against IM re the loss of the 10% "Simmons" uplift?

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  • If I can quote Howard Dean of Keoghs to demonstrate the appalling behaviour of this firm:

    "the principal reasons for the review was to ensure that the maximum amount of costs were gained through success fees by converting claims to CFA funding and in that context it is difficult to overlook the fact that, on just these three cases alone, if successful, Irwin Mitchell would have recovered success fees of £149,380.68 and ATE premiums of £112,412.18 making a total of £261,792.86"

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  • So it is o.k. to reorganize our tax affairs to avoid an upcoming liability but not to change our costs advice.
    Is it any wonder so many know so little about how to organize their lifestyle?

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  • At the risk of inviting predictable comments, does anybody know whether IM are appealing?

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  • This is absolutely disgraceful behaviour by one of the leading clinical negligence firms, and it's a racing certainty that if they were doing it hundreds of lesser-known firms will have been jumping on the same bandwagon to rip off the taxpayer and, it would appear, their own clients at the same time.

    It also illustrates what a shocking licence to print money the old style CFA's were, how grossly unfair they were to defendants and how in circumstances like this they created an unbridgeable conflict of interest between greedy lawyers and their clients - with the clients inevitably coming off worse.

    What's most nauseating is firms like IM bleating about the reforms to costs denying access to justice, when it's quite clear that what they're really concerned about is denying their access to the gravy train.

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  • There is a little more to it than that, 4.46. There were a vast tranche of cases (I don't know whether this was one) where LA was going to be revoked, or the firm deprived of their franchise. On those cases (and again, I don't know whether this was one), the only way for a claimant to continue without risk of paying the other side's costs, was by way of a CFA with LEI.

    The risk of paying the opponent's costs don't end with an admission of liability, by the way.

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  • Presumably the benefit to the Claimant would have been that they would not have exposed themselves to losing 25% of their (non-future loss) claim in paying IM a success fee, if they had to enter into a CFA at any time after 1 April 2013.

    Missing out on a 10% uplift on general damages alone starts to look less of a problem when the alternative is to risk losing up to 25% of those same general damages (and 25% of past losses too). The monetary value of the success fee does of course also depend upon how much work is still to be done post CFA.

    So as is often the case, it is not necessarily as clear cut as those with a vested interest would portray the situation.

    Whilst I have very little time for IM generally, some of the comments made above do sound like bleating Defendant representatives and/or Daily Mail readers

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  • Not a clin neg lawyer myself, but are they not damned if they do and damned if they don't?

    If you know your LSC funding is not going to remain in place until the end of the case, then surely acting in your client's best interests would entail setting up an alternative funding arrangement which minimises (or in this case excludes) any client liability for costs upon successful conclusion of the case. Would it not have been negligent to ignore the costs reforms and leave the client with no choice but to take on a post_LASPO funding after LSC cover expired, when costs liabilities would be greater for the client. This was obviously a huge claim as general damages alone were at least £280K without any uplift, so the 10% uplift would have been far from the most pressing financial issue for the client.

    Mr Dean's outrage would no doubt not extend to the behaviour of his insurer clients who have manipulated the entire civil justice system for financial gain.

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  • They should at least have consulted the client and explained the dilemma. Their failure to do that, which would have been obvious to a first year trainee, damns them of itself. Clearly a conscious decision was taken not to tell the client. The question which they then need to be asked is "Why didn't you?"

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  • I am not a litigator and have little knowledge of the ramifications of LASPO and it's effect on CFA's. However on reading the article, and the comments, it appears that it could have been argued that the action taken was correct. Unfortunately I M failed apparently to prove, first that they had advised the client, and secondly, that the client had made an informed decision. IM may now not only lose their additional costs but possibly they may face a claim from their client, possibly helped by some no win no fee outfit (Slater and Gordon may like some more work) because he may have lost his 10% uplift on the general damages. The proceedings, and what follows, if anything, all because of the lack of a decent file note? There, but for the grace of God, go many of us.

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