12 February 2016Print This Post

Successful challenges to pre-LASPO switches from legal aid to CFAs

Pre-LASPO funding changes under scrutiny

Pre-LASPO funding changes under scrutiny

The High Court has ruled against law firms in two further cases involving medical negligence claimants who switched from legal aid to a conditional fee agreement (CFA) shortly before 1 April 2013, when LASPO restricted the right to recover success fees and ATE insurance premiums.

Irwin Mitchell lost the right to recover for a second time, while Slater & Gordon was on the receiving end of a third ruling. More rulings involving claimants who switched from legal aid to CFAs are expected soon.

Master Rowley ruled in September last year that Irwin Mitchell should lose its right to recover because a client was not told about the 10% uplift to general damages introduced by Simmons v Castle before the switch took place.

The Master said in Surrey v Barnet and Chase Farm Hospital NHS Trust [2015] EWHC B16 (Costs) that failure to advise on the post-LASPO landscape and Simmons damages was “insufficient on which to found any proper or reasonable conclusion”.

He concluded that the client had not given informed consent when agreeing to move from legal aid funding to a ‘CFA Lite’.

In one of the new cases, AH v Lewisham Hospital NHS Trust [2016] EWHC B3 (Costs), heard by Deputy Master Campbell at the Senior Courts Costs Office, the claimant became seriously ill after day surgery, and was taken to intensive care, where she suffered a series of strokes and irreversible brain damage.

She later accepted a defendant’s part 36 offer of £325,000 plus a payment to the Compensation Recovery Unit of £26,400.

Irwin Mitchell claimed £32,350 for the success fee, £4,380 for counsel’s success fee and £18,900 for the ATE insurance premium.

Deputy Master Campbell said the advice the claimant received from Irwin Mitchell was not merely incomplete, but a “very significant component” was missing.

“What the client should have been told was that ‘if you move to a CFA you will forfeit immediately the right to an additional 10% of the general damages you recover, which we estimate could be £175,000, so as much as £17,500’. It was therefore advice that was unreasonable.”

The deputy master went on: “By way of example, had the extra 10% been £175 and not £17,500 it would have had no bearing on the client’s decision because it was de minimis, but where, as here, it could have been as much as £17,500, it is likely to have been a factor, if not the factor, critical in persuading the claimant whether or not to move from legal aid to a CFA.”

He concluded: “It follows that the claimant’s decision, based as it was upon advice that was flawed in a material way, was not objectively reasonable and the claims for the success fees and ATE premium therefore fail.”

In a further case Master Leonard denied Slater & Gordon the right to recover.

The court heard in Ramos v Oxford University NHS Trust [2016] EWHC B4 that the claimant suffered a brain injury at the age of 17, as a result of medical negligence by the defendant.

The defendant admitted breach of duty in May 2012 and the claim was settled in November 2014.

Meanwhile, in February 2013, Mrs Ramos, the claimant’s mother, signed a ‘CFA Lite’ and her legal aid certificate was discharged.

Master Leonard said he was led to the conclusion that, as in Surrey, Mrs Ramos was “not in a position to make an informed choice about the change of funding from LSC to CFA/ATE”, following the “lack of advice” she received about the Simmons v Castle uplift in damages.

However, Master Leonard said there was a “further significant reason” for concluding that “far from being slightly better” than legal aid, the CFA was “significantly worse”.

He said Slater & Gordon was “under an obligation” to advise Mrs Ramos that she might have to pay part of all of her ATE premium, which could have “serious financial consequences”.

Ruling that the success fee and insurance premium were irrecoverable, Master Leonard said he had concluded that the decision to switch was “not made on the basis of adequate advice; that it was not made on a fully informed basis; that it was more to the claimant’s disadvantage than to her advantage; and that it was not a reasonable decision”.

By Nick Hilborne


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