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NHS Resolution Court of Appeal success in ‘bulk conversion’ cases

Date published:

NHS Resolution has saved the NHS £270,000 in legal costs claimed across three test cases heard in the Court of Appeal with potentially millions of pounds more savings expected on cases waiting in the wings.

In line with its strategy to tackle excessive legal costs, NHS Resolution identified a pattern of claimants being moved by lawyers from legal aid to no-win no-fee funding, just prior to changes in the rules resulting from the ‘LASPO’ reforms in April 2013. NHS Resolution argued that this was not in the interests of harmed patients due to the deduction which would be made from their damages and the significantly higher costs which their lawyers could claim from the NHS.

In three separate cases of S v Barnet and Chase Farm Hospital NHS Trust, AH v Lewisham Hospital NHS Trust and Y v Doncaster & Bassetlaw Hospitals NHS Foundation Trust, the costs judges agreed, ruling that solicitors had failed to provide material advice to their clients, or that the advice given was flawed in a material way.

When these three rulings were overturned, NHS Resolution sought clarity from the Court of Appeal, whose unanimous ruling can be found here. At paragraph 60 LJ Lewison says:

“The bottom line is that in each of the three cases the advice given to the client had exaggerated (and in two cases misrepresented) the disadvantages of remaining with legal aid funding; and had omitted entirely any mention of the certain disadvantage of entering into a CFA. Moreover, one of the advantages of entering into the CFA was Irwin Mitchell’s own prospective entitlement to a substantial success fee. In those circumstances I consider that DJ Besford was correct in saying at [81]:
 
“Where one of two or more options available to a client is more financially beneficial to the solicitor, the need for transparency becomes ever greater.”

We welcome the Court of Appeal’s decision in this case which shows how important it is for claimants to be properly informed when it comes to their legal costs. Having detected this issue and taken the decision to challenge it through the higher courts, we were able to save significant sums for the NHS whilst ensuring that claimants receive the compensation they are entitled to.

Helen Vernon, Chief executive

Notes to editors

On 1st April 2013, the LASPO reforms were implemented, with the intention of reducing costs of litigation. As a result of these reforms, claimants are no longer able to recover additional liabilities (i.e. success fees and ATE insurance premiums [with limited exceptions]) from losing defendants. On high value claims, the additional costs often come to more than an extra £100k per case.

In order to compensate claimants for this change, the reforms provided that claimants should benefit from a) a 10% increase to their general damages (in some cases worth in excess of £20,000) and b) ‘qualified one way costs shifting,’ whereby claimants would ordinarily only be at risk of paying the winning defendant’s costs.

In the months preceding 1st April 2013, NHS Resolution noticed a number of law firms were advising claimants to change the way they funded their claims from legal aid to a conditional fee agreement (which would entitle the law firm to recover a success fee from NHS Resolution and ultimately the taxpayer) and an ATE insurance premium which would also be payable by NHS Resolution.

NHS Resolution considered it unreasonable that law firms would encourage claimants to change funding in order to circumvent the LASPO reforms. Particularly in circumstances where the seriously injured claimant would lose a 10% increase to their general damages, whilst their solicitors would be entitled to recover success fees in addition to their own legal costs and ATE insurance premiums, which could amount to hundreds of thousands of pounds for individual claims. This rise in costs would far outweigh the 10% lost by the client and fall to the NHS to pay.

During the legal costs dispute that followed, it became clear to NHS Resolution that claimants had not been sufficiently, or correctly, advised by their solicitors when deciding to change their funding from legal aid to a CFA / ATE insurance premium, which had in turn had resulted in unreasonable claims for additional liabilities against NHS Resolution. As a result NHS Resolution took the necessary steps to challenge this behaviour and limit the resulting burden on NHS resources.

The wider picture

Other funding change cases involving other law firms have been successfully challenged by NHS Resolution. For example additional liabilities totaling £498,000 has been disallowed in the following two cases heard by Master Leonard, sitting as a Costs Judge in the Senior Courts Costs Office:

In R v Oxford University Hospitals NHS Foundation Trust [2016] EWHC B4 (Costs)[i], NHS Resolution succeeded in having the additional liabilities (a success fee and ATE premium totaling £261,000) disallowed.

In Davis v Wiltshire Primary Care Trust [2016] EWHC B6 (Costs)[ii] NHS Resolution succeeded in having the additional liabilities (a success fee and ATE premium totaling £237,000) disallowed, where the claimant had changed funding in 2009, well before the LASPO reforms had been formulated.

  1. NHS Resolution (the operating name of the NHS Litigation Authority) is a Special Health Authority and is an Arm’s Length Body of the Department of Health and Social Care established in 1995. Visit our website for more information about us.
  2. NHS Resolution is a not-for-profit part of the NHS which provides:
    • Indemnity cover for clinical and non-clinical liabilities
    • Expert legal advice and professional support in claims management
    • Support to the NHS in learning from claims and improving safety
    • Assistance in resolving concerns about the professional  practice of individual doctors, dentists and pharmacists in the UK via its Practitioner performance advice service (formerly known as the National Clinical Advice Service, NCAS)
    • A tribunal service for disputes arising from dentists, GPs, pharmacists and opticians about decisions made by commissioners of healthcare which affect their NHS contractors and providers via its Primary care appeals service (formerly known as the Family Health Service Appeals Unit, FHSAU).
  1. Contact

For further information please contact Corporate communications lead Nick Rigg at nick.rigg@resolution.nhs.uk or 0207 811 2688

[i] http://www.bailii.org/ew/cases/EWHC/Costs/2016/B4.html

[ii] http://www.bailii.org/ew/cases/EWHC/Costs/2016/B6.html