The last two and half years have seen widespread reforms in the approach taken to costs in clinical negligence litigation. Prior to April 2013, the majority of claims were funded either by the Legal Aid Agency (LAA) in substantial cases where the claimant had limited means or Conditional Fee Agreements (CFAs) – also known as No Win No Fee. In both scenarios the approach was relatively simple – did the case have sufficient merit to warrant proceeding? If so, the claimant would be eligible for funding, in most cases with no potential costs liability for themselves. If they won their case, they retained their damages in full.
From April 2013, the LAA restricted their funding to claims for children seriously injured at birth or very soon after. The rules on CFAs changed such that successful claimants became responsible for paying a success fee and an insurance premium out of their damages. In addition, the rules on recovery of costs inter partes were substantially changed meaning that recovery of costs would become much more restricted and controlled, particularly in the case of smaller value cases.
To date, this has already had an impact on claimants’ access to justice and the clinical negligence market. Some firms decided that the combination of no longer being able to recover substantial success fees from defendants in successful cases; the restriction on their recovery of base costs; and the high costs of running the case and need for disbursement funding in these cases; meant they could not continue to do clinical negligence work profitably and withdrew from the market.
Other firms who had historically done only personal injury (PI) work felt that the changes to PI costs meant that clinical negligence cases would be more profitable. So they entered the market offering to do the work without charge to claimants but without having any real expertise in this type of work.
Claimants with complicated cases of limited value in damages started to find that either firms would not take their case on at all. Cases were being disputed and claimants were being advised to drop them as it was not cost-effective to continue or that they were faced with relatively limited damages that were severely depleted by deductions for costs. Those hit by the changes were some of those for whom claims were most important – the elderly and those who had lost parents or children due to suspected negligence.
Without warning, there were further announcements this summer about proposals to introduce fixed costs for clinical negligence cases valued up to £250,000 – not just those valued up to £25,000 (as is the case in PI work). There are real concerns about these proposals and their impact on access to justice – particularly as it is too early to assess the impact of the first sets of reforms. Ultimately, fixed costs may well encourage the bad behaviour of defendants that we currently see. For example, denying liability until late in the day and causing repeated delays in the hope that the escalating costs will force solicitors to discontinue the case.
There are also concerns about a knock on effect on patient safety. If clinical negligence litigation is one of the ‘checks and balances’ to help maintain clinical standards, will making it not financially viable to bring smaller claims mean more disregard of standards of care because the threat of litigation reduces? Will it mean that patients who have been negligently injured or lost a loved one will not be able to pursue a claim at all because of damages being limited? Will those who have a valid claim end up being under-compensated because of deductions from their damages? Within the legal market, will it result in firms competing on cost and cutting corners to do these cases as cheaply as possible?
In turn, this could mean that the clients may not have a good job done or may be encouraged to settle early and at undervalue. Or that more firms leave the market and the clinical negligence field ends up being comprised of a small number of large teams who have the economies of scale to do the work well and profitably?
Any way you look at it, the ‘double whammy’ of the reforms means that access to good quality legal representation and the chance to obtain answers and proper compensation is being restricted. The Government set the rules and is also the biggest compensator for clinical negligence claims. These reforms only work in their favour and not for the individual who, through someone’s substandard care, has been left injured or bereaved.
Philippa Luscombe says: "As a clinical negligence solicitor, I consider myself lucky that I have been able to make a real difference to people in achieving not just compensation but answers and apologies for them at the same time as running a successful business. It will be a sad state of affairs if we get to the stage where we can only help people with the most serious injuries because we cannot break even on lower value cases and people with legitimate cases without potential for winning high value damages are left without answers and redress."
This article was published in Surrey Lawyer in January 2016.