Wednesday, 2 March 2016

Fixed Costs and Access to Justice

The Department of Health is responsible for the NHS. It is ultimately responsible therefore for paying compensation for patients negligently injured or killed when under the care of the NHS and for meeting the legal costs incurred when patients have to litigate to prove their claims.

At present successful claimants can recover their reasonable costs - either the NHS agrees that they are reasonable or a court decides what is reasonable.

The Department of Health is proposing to change that system and to fix the legal fees the NHS will be liable to pay to successful claimants. Even if the injured patient has reasonably incurred higher legal costs, they will only be able to recover the fixed amount set by the government. The new regime might apply to claims up to £100,000 or claims up to £250,000 - the government is to consult.

Fixed fees have been implemented in low value personal injury claims such as road traffic accidents. Those claims are usually defended by commercial motor insurers who act with a view to making profit.

Rightly or wrongly the NHS Litigation Authority and other medical defence bodies do not act in the same way as commercial insurers. It is rare indeed to receive an early "commercial" offer in a clinical negligence claim - one that takes into account the risks to the defendant on liability and quantum in advance of a complete set of expert medical evidence or sight of the Claimant's own evidence.

That is their prerogative but the approach tends to prolong cases, increase the number of issues to be investigated and resolved and thereby to increase the costs incurred by claimants. Under the current costs regime the court will reflect the complexity and duration of the case when determining whether the claimant's costs have been reasonably incurred. If the way the NHS has defended an ultimately successful claim, causing costs to rise, it pays. Under a fixed costs regime there is no such discretion. If a case proceeds to a certain stage then the recoverable costs are fixed, whatever legal work and expertise was necessary to prosecute the claim to that stage, and whether or not the NHS could have avoided the need for much of the work to be done.

If a claimant has to spend more on legal fees to see their case to a successful conclusion than the fees they can then recover from the NHS, then either their own lawyers waive the difference or the claimant has to pay out of their own pocket. The NHS does not have limitless resources but it has much deeper pockets than individual claimants, deeper that those of law firms.

This is one of the reasons why a regime limiting the costs recoverable against clinical negligence defendants would risk restricting access to justice for injured patients and their families.

As Chantal-Aimee Dowries,  Chair of the Bar Council has said:

"Large corporations and governments may well be willing to spend large sums of money - beyond what is recoverable - on legal disputes with individuals or smaller corporations whose costs are fixed at a much lower rate. Instead of levelling the playing field, this proposal could tilt it further in favour or big business and the state.

"There is also a risk that access to justice will be restricted. Using the value of a case to determine costs will not always be appropriate. A low value but legally complex case may demand a great deal more work than the allocated cost band will allow. This means lawyers may not take on complicated, low value cases, thus preventing legitimate claims from being pursued."

A fixed costs regime for clinical negligence claims up to £100,000 would cover very serious cases such as stillbirths, fatal claims where the deceased had no dependants and serious injuries to the elderly. There is a significant risk a fixed fee regime will provide a disincentive for experienced clinical negligence lawyers to act in such cases, or at least to devote to those cases the resources required to achieve a just outcome.

Some legal costs claims are excessive and disproportionate but a claim is not the same as an outcome. Mechanisms exist to reduce excessive costs claims to reasonable costs recovery.

Reducing the costs burden of compensation claims against the NHS is an admirable objective but the government should be honest about the reason why fixed fees are being proposed - they are designed not to improve access to justice but to reduce the costs to the NHS of its own negligent errors. That is why it is the Department of Health rather than the Ministry of Justice that is seeking to introduce them.

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