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Fixed recoverable costs are the wrong medicine

Fixed recoverable costs are the wrong medicine


The government should consider alternatives to reducing the NHS's bill before imposing a costs cap, argues Greg Smith

What are the similarities between the 2015 proposals for fixed recoverable costs in clinical negligence claims and the updated 2017 version? Certainly not the level at which the cap kicks in, which has yo-yoed from £100,000 to £250,000 and now down to £25,000. Sadly, the consistent themes are patchy premises and an unfair narrative.

The policy-based argument – most recently set out in the Department of Health’s ‘Introducing Fixed Recoverable Costs in Lower Value Clinical Negligence Claims’ consultation – is that something must be wrong with the current system, as costs can often be larger sums than recovered damages.

The accompanying political language has taken a rather more demagogic tone: ‘unscrupulous’ lawyers (use of that specific word is a particular similarity between the 2015 and 2017 iterations) have been creaming off ‘excessive’ costs. This deliberately and effectively plays into public perceptions of mercenary lawyers having more to gain from litigation than claimants, while reflecting public concerns about the NHS’s parlous financial position.

It’s certainly accurate that the costs of clinical negligence claims can often outweigh the compensation awarded. This is (speciously) compelling – shouldn’t the person who has actually suffered get the larger of these two amounts? However, as even the DoH’s latest consultation acknowledges, issues and evidence may be complex even though the injury is (comparatively) less serious. Just because the compensation that a person receives falls below the cost of proving that they are entitled to it (or below the proposed £25,000 limit) doesn’t mean that they are less entitled to it, and shouldn’t mean they are disincentivised from seeking it.

A skim-read of the CPR belies the accusation of excessive costs being deliberately generated; there are controls on the use of expert evidence, and costs must not only be reasonably incurred, but also proportionate. Not only would excessive costs fall afoul of the latter provision, but a solicitor who deliberately inflated their costs would expect a knock on the door from an unimpressed Solicitors Regulation Authority.

The consequences of the proposal are extremely problematic. Introducing this cap will clearly disincentivise firms from taking on cases where they might not be able to recoup legitimate expenditure. The DoH says 60 per cent of claims fall below £25,000, meaning that access to justice will potentially be limited for the majority of people seeking redress from the NHS for negligence – on the basis of flawed arguments. This might not be unscrupulous, but it’s unfair for claimants and unhealthy for the rule of law.

There are alternatives which could legitimately reduce the NHS’s bill, such as earlier efforts to reach settlement and greater efforts to reduce claims in the first place. Laudably, both are already being pursued by the DoH, and should be given a chance before this more drastic intervention is even considered.

The good news is that the significant fluctuation in the suggested damages level before the cap commences suggests the government isn’t entirely sure of its ground. The consultation closes on 1 May. Make your voice heard.

Greg Smith is a committee member of the Junior Lawyers Division of the Law Society