Solicitors may refuse to take on medical negligence cases at an early stage if courts fail to ensure “adequate cash flow”, a circuit judge has warned.
His Honour Judge Robinson in Sheffield agreed to make a further interim payment on account of costs in a case where the date of the final costs order was likely to be 10 years after liability was conceded.
“Failure to ensure adequate cash flow during the period of inevitable delay may lead to the perverse and undesirable consequence that solicitors are unwilling to take on a case such as this at an early stage,” HHJ Robinson said.
“It is everyone’s interests to determine liability as early as possible. But if the consequence is that solicitors must then fund the quantum investigation for 10 years or more, they may not be anxious to take the case on early.”
HHJ Robinson said the claimant suffered catastrophic injuries when he was born in 2007 and the courts had awarded him payments on account of damages worth £1.2m.
He predicted that the “final shape of the award”, bearing in mind past losses, was likely to be a lump sum in excess of £3m, with periodical payments orders of £150,000 or more per annum.
He said the boy was originally represented by a solicitor at Raleys, who moved to Irwin Mitchell and then, in 2013, to Switalskis in Leeds.
The High Court approved a liability settlement in 2012 in his favour, following which an interim payment of £100,000 was made on account of costs.
Switalskis applied to District Judge Bachelor for an interim payment of £150,000 on account of costs in September 2017, which she rejected, and the claimant appealed.
The defendant responded by arguing that the courts should not make an order for costs “in respect of an aspect of a trial, in this case quantum, which is yet to be determined”.
HHJ Robinson said DJ Bachelor was aware that after the 2012 order, there had been a further voluntary payment of £215,000 on account of costs – of which Irwin Mitchell received £165,000 and Switalskis £50,000.
However, the district judge “gave insufficient or any weight to the fact that Switalskis would obtain no benefit at all from the December 2012 order. The costs in excess of £500,000 incurred by Switalskis have all been incurred since that order.”
HHJ Robinson went on: “An additional £150,000, on top of the £50,000 already paid, is only a very modest payment on account of costs which are almost certain to be recovered.”
The judge said DJ Bachelor “plainly fell into error” in stating that she was not satisfied that an additional £150,000 “would not exceed a reasonable proportion of the costs to which the claimant is entitled”.
HHJ Robinson said CPR 44.2(1) and 44.2(2) were “wide enough to allow the court to make an order for costs of the kind sought by the claimant”.
He went on: “Since there is not yet any part 36 offer from the defendant, it is a virtual certainty that the claimant will be entitled to his costs to date.”
The judge said the orders for interim payments in respect of damages were “the sort of triggering events” anticipated by case law to give rise to a right to receive a tranche of costs.
The likely delay between determination of liability and determination of quantum was another “very significant fact”.
HHJ Robinson said there was “absolutely nothing” in the argument that the payment of £150,000 on account of costs, in addition to the £50,000 already paid, risked “overpaying” the claimant’s solicitors.
“Litigation such as this is expensive to conduct. In my judgment there is no danger that the costs incurred by Switalskis down to September 2017 will be assessed at less than £200,000 inclusive of VAT.”
He ruled that the defendant should be ordered to pay the claimant’s costs to 22 September 2017, with £150,000 paid on account.