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Claimant’s curse of failing to recover additional liabilities following a funding switch from Legal Aid to a pre-LASPO CFA has been broken!

  • 01.08.2019
  • JessicaMG
  • Clinical Negligence, Personal Injury
  • Clinical negligence Personal Injury serious injury PIC costs LASPO Legal Aid, Sentencing and Punishment of Offenders Act 2012 Conditional Fee Agreement CFA Legal Aid Litigation Friend NHS Foundation Trust Legal Services Commission

This article was written by Michelle Walton of Partners in Costs.

To the woe of Claimant solicitors up and down the country, there has seemingly been a recent barrage of cases where the decision as to whether it was reasonable for a Claimant, who was legally aided, to change funding to a Conditional Fee Agreement (CFA) prior to the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) has gone in favour of the paying party.

That is until the recent appeal case of AB v Mid Cheshire Hospitals NHS Foundation Trust [2019] EWHC 1889 (QB). The case was conducted throughout by Partners in Costs, instructed by Potter Rees Dolan, recognised in the first instance Judgment as “experts and specialists in high value serious injury, personal injury and clinical negligence actions”.

The first instance hearing was held in June 2018, following which Deputy District Judge Harris (Regional Costs Judge) gave an extempore Judgment that the decision of the Claimant in that matter to switch from Legal Aid to a CFA in February 2013 was a reasonable one. The Defendant appealed, and that appeal was heard in July of this year, where the decision of the lower court was upheld.


The Claimant, through his Litigation Friend, had instructed his solicitors, Potter Rees Dolan, in 2010, and was granted Legal Aid funding. In February 2013 however, on the eve of the LASPO changes, the Claimant decided to discharge the Legal Aid Certificate and enter into a CFA with additional liabilities – namely a success fee and After the Event (ATE) premium.

The matter settled in June 2017 for a lump sum payment of £3.7 million with periodical payments of £249,000, and the Claimant duly served his Bill of Costs which included a claim for additional liabilities of more than £400,000. Within the Points of Dispute the Defendant objected to the recovery of the additional liabilities, arguing the same were unreasonable on the basis that alternative methods of funding, namely Legal Aid, were available to the Claimant and had already been utilised.

The Claimant argued that the decision to change from Legal Aid to a pre-LASPO CFA was reasonable for a number of reasons. One reason however stood out above all others – the need for freedom to instruct experienced experts.

The LSC and Expert Hourly Rates

As all who deal with Legal Aid cases will know, in October 2011 The Community Legal Service (Funding) (Amendment Number 2) Order 2011 was brought in heavily restricting the hourly rates the Legal Services Commission (LSC) was prepared to authorise for experts. The rates set out in the Order were generally much lower than the standard rates charged by experts.

Whilst in this case the 2011 Order did not technically apply (as the LA Certificate had been granted prior to the Order) it was clear that the LSC were reluctant to authorise hourly rates above those in the Order even where the Order did not apply, and said as much in correspondence in a number of cases run by Potter Rees Dolan. Indeed, the hourly rates of one expert instructed in this case by Potter Rees Dolan had been refused by the LSC, however luckily the expert agreed to reduce his rate.

The Main Action

Instructions were received at the end of 2010, and by November 2012 the Claimant had instructed three experts, and a conference was arranged with Counsel. During the conference the Orthopaedic expert expressed the opinion that the Claimant’s injuries were not caused by the breach or breaches of the Defendant, and therefore causation could not be established. The other two experts disagreed.

It was therefore clear that this was going to be a difficult case where experienced experts would be required – who were likely to charge higher hourly rates than the LSC would be willing to authorise.

As such, the issues were discussed with the Litigation Friend who decided to enter into a CFA in February 2013.

Was the decision reasonable?

The Claimant relied on two Witness Statements in support of the argument that the decision to change to a CFA was reasonable – one from the Litigation Friend, and one from a fee earner at Potter Rees Dolan, Lesley Herbertson.

The Witness Statement of Lesley Herbertson set out the difficulties Potter Rees Dolan had experienced with the LSC in numerous cases around the time of the switch in relation to obtaining authorisation for experts’ hourly rates.

The Defendant argued that these ‘difficulties’ were too generic, with Surrey making it clear that the question of whether a decision to switch funding is reasonable cannot be answered at the macro level, and that it is the individual circumstances of the case which must be considered.

As set out above however, one of the expert’s fees in this case had already been rejected by the LSC, although the Regional Costs Judge found the Claimant’s position was weakened by the fact the expert had agreed to act on the reduced rates.

Further as set out above, there were major issues in relation to causation, with the conducting fee earner, Helen Dolan, who was described by the Regional Costs Judge as “one of the most experienced clinical negligence practitioners in the North West of England, if not the whole country”, putting prospects of success at just 51%.

It was considered that highly experienced and specialised experts would be required to prove liability in this high value and complex matter, however there was a fear that it would not be possible to instruct such experts under the Legal Aid scheme due to the restricted hourly rates on offer by the LSC. It was also evident that a new Orthopaedic expert would have to be instructed, as the current expert was unsupportive of the Claimant’s case.

The Regional Costs Judge found that in this case the Claimant did need the freedom of a CFA “to be free of the shackles of the LSC, in order to properly conduct the litigation”.

At appeal, the Defendant once again argued this reason was too generic, as the same would apply to every case where experts charging high hourly rates were involved.

Rejecting the Defendant’s submissions, Mr Justice Dingemans found the decision of the Regional Costs Judge was not a generic decision which would apply to every catastrophic brain injury case, but a reasonable decision made in the light of a serious dispute between experts on causation.

Dingemans J recognised the key question was what had changed between December 2010, when Legal Aid had been granted, and February 2013, when the decision was made to change funding, noting “a serious dispute had arisen between the Claimant’s experts on the issue of causation, an issue which was critical to the success of the claim. In circumstances where there had already been an issue with one expert’s hourly rate being more than the LSC would authorise, and given the problem with hourly rates being limited by the LSC on other cases, a new funding arrangement was reasonably considered necessary to be made.”

Failure to Provide Simmons v Castle Uplift Advice

It seems to be a common thread in most of the reported Legal Aid to CFA cases that no advice on the loss of the Simmons v Castle uplift was given to the clients. It seems fair to say that in the first few months of 2013, this was an issue not in the minds of claimant solicitors, who clearly had no idea of the challenges they would face from paying parties down the line.

Indeed, the lack of advice seemed to be a main factor in the decisions in the three Surrey cases, and for a while it appeared that lack of advice on the uplift may automatically render the decision to switch to a pre-LASPO CFA unreasonable.

Thankfully, following AB, that is clearly not the case. In AB, a Witness Statement from the Litigation Friend was served advising even if they she had been advised of the loss of the uplift, she still would have made the decision to switch to a pre-LASPO CFA.

The Witness Statement of Lesley Herbertson on behalf of Potter Rees Dolan also provided comparisons, noting that the uplift would have been in the region of £18,000, which when considered against eventual damages of £millions and the risk of not succeeding in the case due to restricted expert evidence allowed in the context of ongoing LSC funding, was not a loss that weighed significantly in the balance.

As such, the Regional Costs Judge found the decision to switch funding was not negated by the lack of the Simmons v Castle uplift advice.

The appeal Judge upheld this decision, accepting that whilst a failure to give sound advice may affect the reasonableness of a decision, in this case where liability had not been admitted (in contrast to the three cases in Surrey), causation was an issue, and where prospects of success were said to be 51%, the reasonableness of the decision was not affected by the failure to give the advice, as the uplift was not a certainty – as if the claim failed, there would be no uplift.

Failure to Advise on Disadvantages of CFA

The CFA entered into by the Claimant’s Litigation Friend was not a CFA Lite (although it was the practice of Potter Rees Dolan never to look to clients for any shortfall). No advice was given to the Claimant on the increased liability for shortfall under the CFA versus the liability under the statutory charge due to the much higher hourly rates charged under a CFA rather than at Legal Aid rates.

This issue was touched upon in the first instance hearing and expanded upon at appeal, with the Defendant arguing that the failure to advise on the disadvantages of the CFA meant the decision could not be found to be reasonable.

The appeal Judge however found the Regional Costs Judge “was right to reject that the failure to advise on the potential additional liabilities for hourly rate and success fee did not undermine the reasonableness of the change”.

Relevance of the Decision in AB

Whilst LASPO came into force over six years ago, there are still many cases concerning a switch in funding from Legal Aid to a CFA just prior to April 2013 coming through the pipeline. Many of these cases seem to have the same issues – mainly no Simmons v Castle uplift advice given and no advice on the disadvantages of a CFA having been properly provided. Paying parties have been jumping on these two failures and ascertaining that, as a result, the decision to switch funding was based on flawed/incomplete advice, and cannot therefore be said to have been a reasonable decision.

As mentioned at the outset of this article, following a number of recent decisions on this issue that also seemed to be the thinking of the courts. Now we have this decision however, the future is looking brighter for receiving parties facing this challenge.

There does of course still have to be a genuine, case specific reason for the change, although it does appear that the ‘case specific’ reason can be based on more generic reasons. It is also clear that evidence will likely be required to show that the any failures in the advice did not materially and adversely affect the decision to switch funding.

Lesley Herbertson, is a Partner within the Clinical Negligence department here at Potter Rees Dolan, she comments:

The outcome in the AB appeal brings with it some reassurance for Claimant lawyers that the court will not routinely find that a pre-LASPO decision to switch funding from Legal Aid to a Conditional Fee Agreement is unreasonable. In the Surrey cases, the court made it clear that every case should be considered on its own facts but, despite that, there has been a sense that Claimants are facing an uphill battle on the point in principle. This decision reverses the trend in the Claimants’ favour and reminds everyone about how difficult it was in early 2013 to give funding advice to clients with a view to ensuring the best outcome that we could for them. In this case, when faced with experts disagreeing internally and very difficult causation issues it was clear to us our client would be best served by abandoning the constraints of public funding.