A law firm legitimately switched its client from legal aid to a conditional fee agreement (CFA) even though a notice of discontinuation was not served on the Legal Services Commission (LSC), a costs judge has ruled.
Master Rowley also said that where it is clear that public funding will not cover the entirety of a case, a decision to change to another option “must be a reasonable step to take”.
Hyde v Milton Keynes Hospital NHS Foundation Trust  EWHC B17 (Costs) was a clinical negligence case where liability was agreed but a dispute over quantum continued for a further 18 months, during which time the LSC refused to increase the funding limitation on the claimant’s certificate. As a result, the claimant and her solicitors, Ashton KCJ, entered into a CFA and took out after-the-event insurance.
The solicitors did not apply to discharge the certificate. They did serve an N251 on the defendant, however.
The defendant argued that this failure meant the claimant could not recover the costs generated under the CFA, but Master Rowley disagreed. This was not, he found, a ‘topping-up’ case where the legally aided party’s solicitor seeks to recover more money than he is entitled from the public purse, while a solicitor should not be expected to act knowing that, if unsuccessful, all future work would be irrecoverable as against either the defendant or the LSC.
He continued: “Where a party has exhausted the costs that can be claimed under a certificate so that it is ‘spent’, they can in principle establish a discharge by conduct in the same manner as certificates in which all of the work up to a limitation of scope has been carried out. The effect of that discharge is to end the services funded by the LSC and enable a private retainer to fund the remainder of the proceedings.
“The notification of the new funding arrangement in form N251 satisfies the need for formality in notifying the opponent of the ending of costs protection. Mr Mallalieu [for the claimant] sought to persuade me that notification was not necessary in any event but I take the view that it was required to deal with the costs protection aspect.”
He moved on to decide that it was reasonable to move on to the CFA. “It is no doubt the case that claims are often successfully concluded in a way which renders the overspend as against the certificate irrelevant.
“But I do not think this means that a claimant and her solicitor who keep an eye on the costs being incurred and so are aware of the limitation problem should be obliged to continue to use the certificate come what may. Parties are encouraged to consider their legal spend prospectively and, where it is clear that the available public funding is going to be insufficient, a decision to change to another option must be a reasonable step to take.”
Though the case straddled implementation of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, Master Rowley found that the reform were not a feature of the solicitors’ decision. However, it was relevant in the other recently reported ruling of his on a solicitor who moved her client to a CFA.
Litigation Futures understands that Hyde is being appealed.