A call to arms

Legal aid used to be bread and butter to lawyers like me. I was as committed to a publicly funded legal service as I was to a publicly funded health service.

To me, both were cornerstones of a properly functioning welfare state.

On completing my Law Society finals, I opted for articles at (what was then) the biggest legal aid solicitors’ firm in the country, dispensing green form advice and applying for substantive certificates which would be typed on flimsy blue paper – initially without any limitations on the amount of costs you could incur or the work you could do.

Armed with such a certificate, the playing fields were levelled. My clients could pursue claims with proper legal representation, just as the defendants could defend them through the largesse of their insurers.

Halcyon days

Alas, those were halcyon days.

The Access to Justice Act 1999 did away with legal aid for most personal injury claims, plugging the justice gap by allowing claimants to instruct their lawyers on a no win, no fee basis for which their additional liabilities – insurance premium and success fee – could be claimed from the defendant in a successful claim.

The insurance premium was there to cover adverse costs orders; the success fee to compensate claimant solicitors from losing and not getting paid at all – the so-called ‘basket of cases’ approach.

Most clinical negligence cases were taken out of scope by the Legal Aid (Sentencing and Punishment of Offenders) Act 2013 (LASPO), but even before then practitioners were noting a hardening of attitudes at the Legal Services Commission (LSC).

Restrictive costs matrices being enforced, limiting the number of experts on a case and how much they should be paid, meant even where legal aid technically existed, the hoops to jump through just for basic support were multiplying.

In response, claimant solicitors needed to make the conditional fee agreement (CFA) system work, even after LASPO shifted the burden from defendant to client to cover their additional liabilities from their damages.

The justice minister who introduced this legislation, Jonathan Djanogly, referred to this as ensuring claimants had “skin in the game” – a gross phrase which I totally resented then and still do.

When people injured through no fault of their own have to resort to law and lawyers to obtain compensation for their misfortune, it is not a nice game; nor is it fair that they must use some of their compensation to pay for the privilege of playing it.

Legal aid’s decline

For my practice, legal aid is now only available for some birth injury claims; child abuse claims (where the prospects of success are so poor or unclear that we wouldn’t offer a CFA); and as exceptional funding for representation at Article 2 inquests or for judicial review (rarely granted in my experience).

When I joined the firm in 1998, legal aid represented a large chunk of funding, paid for disbursements incurred and six-monthly payments on account of costs.

Today, we have just two active legal aid cases. For the rest, we need to fund disbursements and work in progress ourselves, unless the defendant can be prevailed upon to make a payment on account of costs pursuant to CPR 44.2 (8).

You don’t have to be a managing partner to understand the enormous challenge for a firm like us in re-aligning our financial strategy to cope with such a change.

Most defendants we sue still have seemingly unlimited public funding (the NHS, the Ministry of Defence, local authorities, etc) whilst our clients are funded by the firm’s partners.

What a turn-around!

The funding-switch cases

It is against this background that the courts have gazed, with the total benefit of hindsight, on a new game being funded by the NHS – the so-called ‘funding-switch’ cases.

Just before LASPO became law, claimants’ legal advisers were called upon to re-evaluate the funding of their clients’ cases.

The new law meant that from April 2013, a client on a CFA would have to fund their additional liabilities themselves. In the run up to that change, clients on legal aid were urged to consider their options.

It’s the claimant’s solicitor’s duty to consider the best funding method for the case they are litigating (not to do so would be negligent).

This duty is owed to a client at the outset of the case and continually.

Surrey

So it was that last year the Court of Appeal considered three linked cases, collectively reported as Surrey (a child) v Barnet & Chase Farm Hospitals NHS Trust [2018] EWCA Civ 451.

The claimants’ solicitors advised their clients would be best to switch from legal aid to a pre-LASPO CFA lite (guaranteeing no deductions from the client’s compensation) before it was too late to claim additional liabilities from the defendant.

The Court of Appeal considered that advice to be unreasonable, and as it’s for the receiving party to justify the reasonableness of its costs, the clients were denied the ability to claim their additional liabilities from the defendant.

The Court held that because the clients were not advised that by changing funding from legal aid to CFA they would be ineligible for a 10 per cent uplift in general damages (per Simmons v Castle No.2 [2012] EWCA Civ 1288), the switch was unreasonable.

Surrey has been applied inconsistently and became a key issue in my firm’s case of XDE v Middlesex University Hospital NHS Trust [2019] EWHC 1482 involving an alleged delayed diagnosis of tuberculous meningitis causing life-changing injuries.

Here, we switched funding from legal aid to a CFA in May 2012 (before the 10 per cent general damages uplift was affirmed by the appeal court in Simmons).

Jay J in XDE noted that “the Costs Judges in Surrey had concluded at an ‘abstract’ ‘generic high-level’ or ‘macro level’ of assessment that the pros and cons of legal aid as against a CFA Lite were finely balanced”.

But as anyone who has worked at the coal-face of clinical negligence litigation will tell you, this was not the case as our uncontested evidence at the costs hearing illustrated: legal aid was bureaucratic, the costs limited, and a claimant faced deductions from damages when failing to beat a Part 36 offer by operation of the statutory charge.

By contrast, CFA lites offered freedom for the representatives to run the case as they saw fit, and after-the-event insurance would cover the adverse Part 36 costs risk.

The underlying reason for the switch in our case was that the legal aid costs limit had been exceeded and we had zero expectations that this would be extended to cover the significant work that needed to be done (both limitation and causation were much in dispute).

Our client’s damages claim eventually settled for a capitalised £10.5m. However, it was still unreasonable for us to have advised our client to switch to a CFA – we should have persevered with legal aid.

AB and Hyde

This ruling appears to be at odds with AB v Mid Cheshire Hospitals NHS Foundation Trust [2019] EWHC 1889 in which Dingemans J found the claimant’s decision to switch from legal aid to a pre-LASPO CFA in February 2013 to be ‘reasonable’ as the claimant’s lawyers desired the ‘freedom’ of a CFA to remove ‘the shackles’ of legal aid to properly conduct the claim.

Notably, there were problems with the LSC restricting the number of experts who could be instructed and the rate at which they should be paid.

Also instructive is the case of Hyde v Milton Keynes Hospital NHS Trust [2017] EWCA Civ 399, where it was held the absence of a formal discharge of a legal aid certificate did not render the new CFA unenforceable because the funds available under the certificate had been exhausted.

A call to arms

Legal aid in personal injury and clinical negligence claims is a sham.

The operation of the system by the LSC (now the Legal Aid Agency) is so restrictive for those few cases remaining in scope that it makes for an unattractive funding option when compared with a CFA lite.

Other lawyers pursuing serious injury cases will have faced a similar dilemma to those in the Surrey cases and AB.

We are hoping to expose this sham in the Court of Appeal in XDE, so consider this a call to arms for all those lawyers facing similar arguments.

Jonathan Wheeler is managing partner at Bolt Burdon Kemp boldburdonkemp.com

Copyright & permissions