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Decision to switch from legal aid to CFA on eve of LASPO ruled reasonable

Hayman: welcome news [1]

Hayman: welcome news

A claimant who switched from legal aid funding to a conditional fee agreement (CFA) on the eve of the introduction of the Jackson reforms acted reasonably, a costs judge has decided.

Master Leonard made the ruling despite finding that the solicitors, London firm Bolt Burdon Kemp, had not provided enough information to the client about the pros and cons of the move.

He said: “One does have the impression that the solicitor, having reached a conclusion, more or less nudged the client towards the conditional fee agreement arrangement. In saying that, I emphasise that I do not and I should not speculate as to what the thinking might have been behind that.

“Of course it has been pointed out to me that it is likely to be advantageous to a solicitor to have the client into such an arrangement but, equally, it seems to me that at that particular time, with changes in the funding regimes coming and raising real issues which did bear consideration, a solicitor would be anxious to ensure that he did not expose himself to potential complaint from a client who had not been given the opportunity to consider the funding options and to take the best option from the client’s point of view.”

AMH v The Scout Association concerned a claim for damages in relation to childhood sexual abuse and the claimant had the benefit of legal aid from March 2012. On 23 March 2013 he chose to discharge the legal aid certificate and replace it with a CFA dated 26 March, ahead of the introduction of the LASPO reforms on 1 April.

His solicitor had concluded that the Legal Services Commission (as was) would not provide sufficient funding to take the case to trial and that there was a possibility the client would obtain employment, thereby ending his eligibility for legal aid.

He also thought it unlikely that the impending 10% increase in general damages would defray the cost of irrecoverable success fees and that it was in the best interests of the client to switch funding.

This was followed up with a “brief” telephone conversation with the client.

The defendant argued that this was not a reasonable choice and the success fee and after-the-event insurance premium should be disallowed.

Master Leonard decided that the solicitor was obliged to consider the risk of losing legal aid funding in the circumstances of the case, but found that the advice he gave the client was “incomplete” because it did not go into the more positive aspects of the new regime, such as qualified one-way costs shifting and capped success fees.

However, the judge continued: “I am unable to accept that a choice must be unreasonable if it is not made on the best available information. I think one has to consider… whether the choice was reasonable in all the circumstances. It is… possible to make the right choice for, here, not so much the wrong reasons as an incomplete set of reasons.”

This was particularly the case given that the client was being offered a CFA Lite, meaning he would not lose any damages to meet unpaid costs. “The fact this was a CFA Lite arrangement was crucial,” said Master Leonard.

He concluded that the solicitor had been obliged to put the question of funding to the client given the impending change of regime. “So notwithstanding the fact that I do accept that the advice given was too brief and not as detailed and complete as it should have been, it does seem to me to have focused upon a genuine key issue in relation to the preservation of the client’s damages.

“The solicitor gave it in the knowledge that if he did not give that advice, it was possible that the client might lose out financially at the end of the day.”

Sam Hayman, senior costs advocate at Bolt Burdon Kemp, said: “This claim dealt with the difficult issue facing many practitioners two years ago, with the availability of legal aid dwindling, ever more emphasis on the costs benefit ratio and the new CFA and ATE regimes coming into play.

“The findings of Master Leonard show that the SCCO is appreciative of the need and desire by claimant solicitors to preserve client damages as much as possible and that success fees and insurance premiums will be awarded where the claimant has acted reasonably in making their funding choices.

“It is welcome news that claimant solicitors have persuasive guidance on the issue from the SCCO, which will be tasked with hearing the majority of claims with such issues.”

For the full ruling, click here: Approved Judgement [2]