A guest post by Alex Summerscales, a partner in the costs department of Manchester firm Express Solicitors
Why are judges preventing access to justice for the most vulnerable injured members of society?
In my firm’s experience, up and down the country, deputy and district judges are routinely refusing to allow payment out of damages for success fees, after-the-event (ATE) insurance premiums or indeed any other form of legal expense.
Judges are either refusing to order payments out or in some instances adjourning the hearing of deduction applications, meaning the litigation friend and child having to re-attend court, sometimes many, many months after the approval hearing.
Applications for payments out for ATE premiums are routinely refused based on judges’ views of a perceived absence of risk, without reference to the litigation friend. There appears to be a presumption that if payment out of damages is not made, the premium does not have to be paid but this is not necessarily the case.
The government clearly intended payments out to be made and litigation friends are being left with personal liability to pay premiums, regardless of their means to pay.
The assessment of success fees has also proved problematic. Any perceived lack of compliance with CPR part 21 will be enough to disallow payment out. There appears to be an assumption that refusal to assess a success fee and make an order will have no personal impact on the litigation friend. Further the Judges consideration of risk in assessing percentages is inconsistent with modern practice and more recent views on the explanation of risk and the business modal, as per the Herbert case.
April 2013 saw civil litigation shift back to pre-April 2000 days of solicitors recovering success fees direct from their clients.
The government, via the proposals of Sir Rupert Jackson, abolished the recovery of success fees between parties with the absolute intention that the profession would levy a charge against claimant clients, along with payment by the client of an ATE premium, if necessary.
Children were not exempt; CPR parts 21.12 and 46.4 were not clear or practically effective and have been subject to a number of amendments. General damages were increased by 10% to seek to account for the deduction from damages and this went some way to compensating claimants who must now pay a success fee or contribution to their legal bill.
The rules presumed that this would only be by way of a success fee and did not even consider any other form of retainer or charge. If the charge was not a success fee, the client is required under CPR 46 to have a solicitor and own-client assessment. Who pays the costs of a long-winded and expensive assessment?
The abolition of the recovery between opposing parties, of success fees and ATE premiums was lauded by the insurance lobby. The increase in general damages was, however, not taken so well. This was number 10 of 109 recommendations in the Jackson final report (FR). In his 10th implementation lecture in 2012, Sir Rupert noted:
“An early attack on recommendation ten came from liability insurers. At a Law Society conference on 23 February 2010 (a month after the FR was published) a senior director of Aviva Insurance attacked the 10% increase as bringing a ‘disproportionate benefit’ for claimants. He argued that because of this increase in damages, the overall package of FR reforms would increase the sums paid out by liability insurers.
“On the claimant side, the line of attack has been very different. It is argued that a much larger increase in general damages is required, in order to ensure that no claimants lose out as a result of having to pay their own success fees”.
It absolutely right that rules and safeguards are put in place to ensure any money deducted from a child or protected party’s damages is done so properly and in accordance with the law. But do members of our judiciary have the best interests of vulnerable court users in mind when refusing payments out?
The impression is that judges feel it is wrong to allow these payments out, despite the government’s intention to the contrary.
The practical effect means that this type of work will become less and less attractive to solicitors, which may in turn lead to a narrowing of access to justice for injured children or those without capacity.
Personal injury practices have to operate and survive, against the backdrop prescribed fixed fees, which are set to be extended further. As the government intended, firms do not have an option but to levy a charge against damages for all clients. The short-sighted nature of the reforms, in respect of children and protected parties, means that the only way that could be done against the client was by way of success fee, the only other alternative being a contractual charge payable by the litigation friend.
District judges seem to assume that personal injury practices will simply absorb such charges, often not realising that there is a valid contract between the litigation friend and the child’s solicitor, and that these charges will need to be enforced is solicitors are to continue to work profitably.
District judges tend to look for and find reasons not to allow deductions for success fees, ATE premiums or litigation friend expenses. This will contribute to a contraction of the market and the disappearance of a number of practices that previously helped secure justice for vulnerable members of the public and children.
The profession will not and cannot afford to operate without charging clients. The judiciary needs to realise that those charges are the government’s will and are recoverable, subject to compliance with the relevant rules. Judges should assume payments out of damages are routine, in order to cover legal charges and expenses that are properly raised in these cases.