Braced for an answer on informed consent

‘Informed consent’ – two words that fill claimant law firms with dread. The personal injury sector has been in the grip of a long-running and complex saga over what that deceptively simple phrase really means, ever since the court in Herbert v HH Law Ltd [2019] EWCA Civ 527 concluded that ‘informed consent’ held the key to whether success fee deductions from a client’s damages were valid.

But after many twists and turns in this ongoing drama, the season finale is approaching. The Court of Appeal is set to resume its previously abandoned attempt to hear the long-awaited and high-stakes case of Belsner on 12 July. As readers may recall, Belsner is a solicitor-own client dispute in which the CoA is expected to give definitive guidance on informed consent, as well as other issues. It was originally due to be heard in February, but after three hours of submissions master of the rolls Sir Geoffrey Vos decided that the case’s ramifications were more ‘profound’ than the court had appreciated and more time was needed. The entire hearing was scheduled to start again from scratch later in the year; and is due to begin in just a few days.

But in the few months since the abandoned hearing, there has been no shortage of fresh action from the lower courts on informed consent. Last month PI giant Slater and Gordon was refused permission to appeal against an unfavourable interlocutory ruling by Ritchie J in the High Court in May. Ritchie J had ordered the law firm to hand over to its opponents documents and audio recordings of claimants being signed up, noting that the one recording he had listened to was enough to ‘feel uncomfortable about lack of informed consent’ involved in the process. The action encompasses 150 similar cases also being brought by former clients of Slater and Gordon, which is thought to have accounted for around 8% of the PI market from 2013 to 2021. The law firm has pointed out that these were only interlocutory matters and it has full confidence in its actions.

Then, last month, ‘informed consent’ took yet another starring role in a courtroom drama – although this was a different type of case altogether. In EVX v Smith [2022] EWHC 1607 (SCCO), another PI giant, Irwin Mitchell, achieved a settlement of £225,000 in a clinical negligence claim on behalf of a child claimant, whose mother was acting as litigation friend. Because the client was a minor, the settlement sum required a green light from the court, as did the £28,000 deduction from damages sought by Irwin Mitchell to meet its fees and disbursements, thanks to a shortfall in the amount of costs to be recovered from the defendant. So the client herself had made no complaint about the amount that Irwin Mitchell was seeking to deduct from damages; but Costs Judge Brown still decided to reduce it.

The judge was not happy with the hourly rates claimed by Irwin Mitchell, noting that the rates charged of £235-£240 an hour for Grade C fee-earners working at the Southampton office were ‘not far off the guideline hourly rates for a Grade A fee-earner in 2021’, and were ‘clearly unreasonably high for the work done’.

On the vexed issue of informed consent, Costs Judge Brown had no time for Irwin Mitchell’s argument that the claimant’s mother had approved those hourly rates by entering into a conditional fee agreement which provided for the rates claimed, which was explained to her orally; and that, as she had given her approval, the rates must be considered reasonable.

Instead, the judge found that the claimant’s mother had not given ‘informed consent’ to the rates. He said: ‘[She] was informed of an obligation to pay a shortfall in relatively opaque terms, without reference to the reasons why all the sums claimed may not be recoverable… [even though] the solicitors were likely to have been fully aware that the relevant hourly rates were unlikely to be recoverable from the defendant…

‘It is not enough for [her] to have been informed of the prospect that there would be a shortfall in the recovery of the costs from the defendants, nor that she was informed of the amount that the solicitors say would be payable by way of shortfall as the case went on, nor indeed that she approved settlement of costs with the defendant. It is clear that… the solicitor’s explanation must be directed to the unusual nature of the costs: in this case, the hourly rates.’

Costs Judge Brown then went through the schedule and reduced the various hourly rates to what he considered to be appropriate levels.

The outcome of next week’s Belsner hearing will clearly be hugely significant for the claimant legal sector. The arguments will be detailed and compelling, with eminent counsel and three days of court time set aside. The ruling could go either way but the mood music coming from judges in the lower courts certainly does not bode well for claimant law firms. It could be time for the sector to adopt the brace position.

Rachel Rothwell is editor of Gazette sister magazine Litigation Funding, the essential guide to finance and costs.

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