NHSLA warns on costs appeals

Topics: Costs, fees and funding

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The NHS Litigation Authority has warned it has hundreds of costs appeals in store for claimant firms that tried to change clients’ funding arrangements in the runup to implementation of the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act.

The authority last week won a fourth test case against a claimant firm that had switched its clinical negligence client from legal aid funding to a conditional fee arrangement.

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The change was made in the weeks leading up to April 2013, when recoverability of success fees and after-the-event insurance premiums were about to be abolished.

The High Court ruled that national firm Irwin Mitchell could not claim around £105,000 in additional liabilities because the client was not made aware of their options – particularly the offer of a 10% uplift on general damages that came as part of the reform package.

The NHSLA said it has now saved £500,000 in additional liabilities claimed in three cases by Irwin Mitchell and one by Slater and Gordon.

An authority spokesman said in many of the cases where changes in funding had taken place, in particular in larger loss claims, it will take some time for damages to settle.

‘It is only when the legal costs are presented at the claim’s conclusion that the total scale of additional liabilities charged becomes clear,’ he added. ‘There are hundreds of claims potentially affected by these four test cases and, where appropriate, the NHSLA will seek to have inappropriate legal costs struck out by the courts in similar claims.’

In Yesil v Doncaster NHS Trust, Irwin Mitchell sought to argue that its failure to give material advice was not relevant to the consideration of whether the decision to switch was reasonable. But the court ruled the client was entitled to have some understanding of their options, even if the firm advising them ‘leaned’ a certain way.

Irwin Mitchell said it acted in the best interests of a specific group of clients by protecting them from changes arising from LASPO and steering them away from an ‘increasingly complex and constrained’ legal aid system.

Readers' comments (7)

  • Had these clients not been transferred to a CFA they ran the risk of falling between the cracks (gaping chasms in fact) in LASPO. They may get a 10% uplift but as the case was opened pre LASPO then QOCS would not apply so there would be a costs risk necessitating the purchase of an ATE policy which would be taken from their damages.

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  • To give some balance, there have also been decisions confirming that the decision to switch from Legal Aid to a CFA was reasonable e.g. Hyde v MIlton Keynes Hospital NHS FT (http://www.bailii.org/ew/cases/EWHC/Costs/2015/B17.html).

    Anyone working with the LSC/LAA over the last few years on Clin Neg cases will know that their approach has become increasingly restrictive, particularly with regard to expert hourly rates but there's plenty of other examples. There were plenty of arguments for and against a switch, and I think it is unfair to paint this as obviously and only explainable by firms trying to maximise costs. Whether maximising costs was actually what was behind the switch is another matter; lack of advice on all those arguments for and against doesn't help it look good.

    As a minor side point - even after 3 years, judges are still getting the 10% bit wrong e.g. Summers v Bundy recently in CofA, where the trial judge had refused to apply the 10% as claimant had been in receipt of LA funding.

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  • And most of the cases will allow the recovery of success fees and premiums where the cients have been advised and lets not overlook the 1000s of challenges to claims that are reasonable but the NHSLA insist on offering 50-60% of the claim and end up paying much more on assessment plus costs and significant interest as they refuse to make payments on account of costs because they have blown through their budget for the year and the additional costs where they refuse mediation

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  • In a significant number of cases where LA Funding was in place before the cut off date it would have been arguably negligent not to advise the client to change funding arrangents for a number of reasons including the risk of the client becoming financially inelligible,failing the cost benefit test,exceeding the level of funding provided at a particular stage risking a judgment against him/her,being refused authoity to instruct a particular expert etc.To make a finding against a solicitor in those circumstances seems harsh particularly if the client subsequently was happy with the decision.The only failiure was to inform the client of the situation of what may have been a no brainer.Then again it seems the courts are generally more amenable to alleviating hardship to defendants rather than claimants

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  • As I've said elsewhere. it does seem very strange to me that the client's opponent profits from knowledge about what advice the client was given. It seems that once the first bricks in the edifice of solicitor client privilege were removed no one knew where to stop.

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  • Now that we know that there are firms whose clients claim £1m plus £240,000 p a, but settle for £50,000 j(yes, over 95% less!) just two weeks before trial, NHSLA should immediately withdraw all Part 36 offers and take all cases to trial on both liability and quantum. The NHS is being taken for a ride and it will be ruined by these claims if a stop to them is not put to them and put to them immediately.

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  • Yes Raynor, small matters of having cogent evidence before starting a claim is now consigned to legal history according to some posters on here. Sad for us and even more sad for them and their clients.

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