NHS Resolution has saved £270,000 in legal costs that was claimed across three test cases heard in the Court of Appeal, with potentially millions of pounds in more savings expected on litigation waiting in the wings.
In line with its strategy to tackle excessive legal costs, NHS Resolution identified a pattern of claimants being moved by lawyers from legal aid to no-win no-fee funding, just prior to changes in the rules resulting from the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act reforms in April 2013.
The LASPO reforms prohibited the recovery of additional liabilities from losing defendants. On high value claims, the additional costs often come to more than an extra £100,000 per case, according to NHS Resolution.
NHS Resolution argued that this was not in the interests of harmed patients due to the deduction that would be made from their damages and the significantly higher costs that their lawyers could claim from the NHS.
In three separate cases of S v Barnet and Chase Farm Hospital NHS Trust, AH v Lewisham Hospital NHS Trust and Y v Doncaster & Bassetlaw Hospitals NHS Foundation Trust, the costs judges agreed, ruling that solicitors had failed to provide material advice to their clients, or that the advice given was flawed in a material way.
When these three rulings were overturned, NHS Resolution sought clarity from the Court of Appeal, whose unanimous ruling on 16 March, written by Lord Justice Lewison, said: “The bottom line is that in each of the three cases the advice given to the client had exaggerated (and in two cases misrepresented) the disadvantages of remaining with legal aid funding; and had omitted entirely any mention of the certain disadvantage of entering into a CFA. Moreover, one of the advantages of entering into the CFA was Irwin Mitchell’s own prospective entitlement to a substantial success fee.”
“In those circumstances I consider that DJ Besford was correct in saying at : ‘Where one of two or more options available to a client is more financially beneficial to the solicitor, the need for transparency becomes ever greater.’”
NHS chief executive Helen Vernon said: “We welcome the Court of Appeal’s decision in this case which shows how important it is for claimants to be properly informed when it comes to their legal costs.”
“Having detected this issue and taken the decision to challenge it through the higher courts, we were able to save significant sums for the NHS whilst ensuring that claimants receive the compensation they are entitled to.”
Irwin Mitchell represented the three claimants at the centre of the Court of Appeal decision. A spokesperson for the law firm commented: “Over five years ago we advised a small proportion of our legally aided clients who had medical negligence claims to switch from legal aid to a ‘no win no fee’ agreement ahead of unprecedented law reforms in which legal aid for most medical negligence claims was being abolished and a law which introduced charges to clients for no win no fee agreements entered into after 1st April 2013.”
“This allowed our clients to pursue their cases to a successful conclusion unfettered by any (existing or future) restrictions around legal aid and without having to make any contribution to legal costs (as the no win no fee agreements pre-dated the change in the law) and many have since recovered many millions of pounds in compensation to provide for their long term needs.”
The Irwin Mitchell spokesperson added: “The Court of Appeal is critical of our advice in three individual cases but we remain of the view that the switch was reasonable and in the best interests of those clients as the High Court agreed back in 2016.”
“We are considering our position on appeal.”
NHS Resolution has successfully challenged other funding change cases.
Additional liabilities totalling £498,000 were disallowed in two cases heard by Master Leonard, sitting as a costs judge in the Senior Courts Costs Office. They were R v Oxford University Hospitals NHS Foundation Trust and Davis v Wiltshire Primary Care Trust in 2016.