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When is it reasonable for a claimant to change from legal aid to a conditional fee agreement (CFA)?

This is a key question that has been asked by many civil litigation practitioners, particularly following implementation of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO).

Many firms opted to review the funding of their cases with the impending changes in April 2013 and only now are we seeing guidance from the court as to whether, in cases where funding has changed from legal aid to CFA, incurring additional liabilities in the form of success fees and after-the-event insurance, should be considered reasonable.

The first cases to filter through the Senior Court Costs Office (SCCO) provided a mixed verdict and were considered to be particularly case specific. In Hyde v Milton Keynes Hospital NHS Foundation Trust, Master Rowley found that the change of funding was reasonable where the claimant had reached the financial limit of their legal aid certificate. Mr Justice Soole upheld the decision on appeal.

A second case arrived shortly afterwards, again before Master Rowley. In Surrey v Barnet & Chase Farm Hospitals NHS Trust, he found that the change of funding was not reasonable because, unlike in Hyde, the implementation of LASPO was the motivating factor and the solicitors had failed to advise of the 10% damages uplift the claimant would receive following the Court of Appeal’s ruling in Simmons v Castle. Similar rulings were made by Master Campbell in AH v Lewisham Hospital NHS Trust, and District Judge Besford in Yesil v Doncaster & Bassetlaw Hospitals NHS Foundation Trust.

A further case has recently been heard, this time before Master Leonard: Ramos v Oxford University Hospitals NHS Foundation Trust. In this case, Master Leonard did not find the change of funding to be reasonable, nor did he think that adequate advice had been provided, for example the claimant was not informed about the potential costs liability for the ATE premium. A similar advice failure was found in Davis v Wiltshire Primary Care Trust.

These decisions provide little by way of encouragement for solicitors who advised their clients to switch from legal aid to a CFA prior to the implementation of LASPO. There has been little sympathy from the courts for those who failed to provide full advice to their clients on the implications either way.

One would perhaps have a degree of sympathy for those who may have overlooked the Simmons v Castle advice, particularly given the extent of the numerous changes which were affecting civil litigation and legal aid in early 2013 and the haste which was required. However, the key message to take from these cases is that the Simmons uplift was considered to be a significant advantage to remaining with public funding; it would have been a key consideration for the client, had the information been provided.

Likewise, failure to inform a client of their liability in respect of the cost of an insurance premium, notwithstanding any informal or working commercial arrangement for indemnity, may also render advice provided to the client inadequate.

However, there is still scope for further clarification from the court. In cases where full advice was provided, but the client nevertheless opted to transfer to a CFA in advance of the implementation of LASPO, one assumes that the change of funding would be deemed reasonable.

Recent media reports have suggested that the NHS Litigation Authority has “hundreds” of similar costs appeals in store, so we are unlikely to have heard the last of this contentious issue just yet.

I would expect to see the NHSLA taking more of these cases to detailed assessment over the coming months and some claimant firms to appeal such decisions, particularly given the impact on them and their cash flow.

Association of Costs Lawyers Steve Davies

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