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Civil Litigation Section

Managing fixed costs in clinical negligence work

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  • Rebecca Thomas

The government’s plans to introduce fixed recoverable costs for clinical negligence claims have been delayed, but are unlikely to be on hold for long. If this is the direction of travel, argues Rebecca Thomas, director in clinical negligence at Duncan Lewis, here’s how to make the regime work.

The Department of Health (DoH) intends to limit the costs for clinical negligence claims with the value of up to £250k by the introduction of a fixed costs regime.

The fixed costs regime was due to come into effect on 1 October 2016; however, the health minister has confirmed that a delay in the publication of the DoH’s consultation means that the reforms will not be introduced by this date.

There can be no doubt that clinical negligence places a huge strain on NHS finances; however, the impact on patients is far greater. The fact of the matter is that compensation and costs are only paid in successful cases, i.e. where it is proven that someone has been injured or died as a result of medical negligence.

During the period April 2010 to December 2014, the NHS Litigation Authority (NHSLA) paid £501.7m in damages and costs to the top 10 law firms in England and Wales. Of this sum, £292.4m was paid to claimant solicitors and £209.3m was paid to defendant firms. These figures alone do not provide an accurate picture of recovered costs, given that this figure includes the damages paid to injured claimants.

Jackson’s recommendations

Lord Justice Jackson prepared a Final Report following his review of civil litigation costs, which was presented in 2010. Following publication of the report, fixed costs have been introduced for personal injury cases in the fast track. At the IPA annual lecture on 28 January 2016, Lord Justice Jackson recommended an extension of the existing fixed costs regime to include clinical negligence claims with a value of up to £250k.

It is estimated that claimant solicitors reject approximately 90 per cent of the clinical negligence enquiries they receive. The introduction of a fixed costs regime will dissuade firms from taking on complex cases and cases worth under £250k, and this will have a negative impact on access to justice.

A fixed costs regime will dissuade firms from taking on complex cases and cases worth under £250k, which will have a negative impact on access to justice

Given that the health minister has accepted that there is no exact correlation between the value and complexity of clinical negligence claims, it follows that the introduction of fixed costs based on the recovered damages will lead to injustice, particularly if the NHSLA is not subjected to similar constraints.

One of the reasons cited by Lord Justice Jackson for introducing fixed costs is that it will be an effective way of ensuring that parties’ recoverable costs and its adverse costs are proportionate to the subject matter of the litigation. The CPR 1998 have been amended to include three significant revisions which affect clinical negligence claims.

1. An amendment to the overriding objective which requires the court to deal with cases justly and at proportionate cost.

2. The introduction of compulsory costs budgeting.

3. Ensuring that on an assessment of costs, even if such costs were reasonably and necessarily incurred, they will be disallowed or reduced if disproportionate in amount.

In addition, tighter controls over costs were introduced in LASPO 2012, which came into force on 1 April 2013. As clinical negligence claims take two or more years to conclude, and a further six months to deal with the question of costs, the impact of the Jackson reforms has not yet materialised or been properly assessed.

During the debate on this issue in the House of Commons on 9 March 2016, Sir Edward Garnier (Conservative MP for Harborough) stated as follows: 

‘Let us also remember that the [LASPO] 2012 automatically cut the costs and expenses paid out by the [NHSLA] by about a third, and that for claims worth less than £25,000 those savings come to 39% of the costs budget, or £71 million a year. In the NHSLA’s annual report of 2014-15, the chairman asserts that more than a third of the NHSLA’s spending was received by the legal profession, and most was paid to claimant lawyers. In fact, the report shows that the NHSLA’s operating costs amounted to £2.64 billion, of which £291.9 million, or 11%, was paid to claimant lawyers and £103.2 million, or 4%, to defence lawyers.’

If such a regime is to be introduced, new rules need to be drawn up relating to the conduct of such cases. Cooperation and reasonableness are crucial

Clinical negligence claims are initially dealt with by the NHSLA. Unfortunately, the NHSLA rarely admits liability in cases that could and should be settled at an early stage. As a result, proceedings are issued with the resultant increase in costs. This was acknowledged by Sir Edward Garnier in his speech to the House of Commons as follows:

‘… in addition, the NHSLA too often engages in unproductive trench warfare: it must not be seen to be giving ground, so the order goes out: “deny, defend, delay!” Cases that could have been resolved months and sometimes years earlier end up being settled at the door of the court, or lost after a trial, by which time advocates brief fees have to be added to all the other costs that have piled up unnecessarily since the complaint was first raised. If ever there was a need for patient to heal himself, it is the NHSLA in its refusal to free itself from the indefensible, or to see the wood for the trees. Rather than too often denying, defending and delaying in the wrong cases, it should assess, admit and apologise in the right cases.’

Full steam ahead?

Despite fierce opposition from claimant solicitors and organisations such as the Society of Clinical Injury Lawyers, Association of Personal Injury Lawyers and the Bar Council, it appears that the government is intent on introducing fixed costs in clinical negligence claims in accordance with the recommendations in Lord Justice Jackson’s Final Report.

If such a regime is to be introduced, new rules need to be drawn up relating to the conduct of such cases. Cooperation and reasonableness are crucial, and provided this is enshrined in the new rules, it will result in claims being concluded in a more efficient and cost-effective manner.

At the moment, both parties instruct independent expert witnesses at considerable expense as each witness typically charges between £6k and £12k. As such, the introduction of a single joint expert in all but the most exceptional cases would lead to a reduction in costs; however, this proposal cannot be introduced under the current adversarial system.

In the absence of a complete overhaul of the existing system, expert witnesses could be required to give evidence concurrently (also referred to as ‘hot-tubbing’). In my experience, several Masters in the High Court have ordered that expert evidence be given concurrently. This needs to be extended to the other courts in England and Wales, particularly if the fixed cost regime in clinical negligence cases is adopted.

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