Legal Aid and funding for civil litigation
Legal Aid and future medical negligence compensation claims
The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) was given royal assent 1 May 2012. It is due to come in to force 1 April 2013.
This is a far reaching piece of legislation with significant implications for Claimants seeking compensation for personal injury and medical negligence.
This outlines the main provisions likely to affect personal injury and clinical negligence Claimants and their representatives.
Legal Aid will no longer be available for clinical negligence cases except for cases involving children who have suffered brain injury during or shortly after birth.
Legal Aid will only be available for these cases where the case is bought on behalf of the child and where the child has been left with a severe disability. It will apply only where the injury was sustained negligently in the mother’s womb, during delivery or up to 8 weeks after 37 weeks gestation (or, if the baby was born before 37 weeks gestation, 8 weeks from the time that the baby would have been of 37 weeks gestation).
It is good news that legal aid will remain available for this type of birth injury case which are particularly complex and expensive to litigate. However, there are many Claimants who will miss out with equally deserving and complex cases. The cut off point for funding of 8 weeks after 37 weeks gestation is arbitrary and likely to lead to some unjust outcomes for children whose injury falls narrowly outside this time frame.
The exception for representation at coroner’s inquests in exceptional cases and where convention rights apply, will remain.
Referral fees, conditional fee agreements and insurance premiums
At present, most personal injury and clinical negligence cases are funded either by an existing insurance policy (before the event insurance) or by a conditional fee agreement (no win no fee agreement). In an attempt to reduce the cost of litigation on Defendants (including the NHS) LASPO embodies a number of Lord Jackson’s recommendations on the costs of insurance litigation.
One of the most important changes is that Claimants will no longer be able to recover the success fees incurred under a conditional fee agreement, from the Defendant. This means that Claimants will have to pay their solicitor’s success fees out of their damages. Success fees exist in order for Claimant solicitors to “offset” the costs that they lose in unsuccessful cases. Solicitors will only be able to recover success fees up to a certain percentage of a Claimant’s general damages (their award for pain and suffering). Whilst it is widely anticipated that the limit will be 25% of general damages, LASPO does not actually provide for this and as such secondary legislation or court rules will be required.
LASPO also prevents Claimants from recovering the cost of their after the event insurance premium from the Defendant. Currently, insurance is taken out in all litigated cases where there is a conditional fee agreement in order to cover the Claimant’s risk of having to pay their own expenses (disbursements) and the Defendant’s costs, in the event that they lose their case. The cost of the insurance premium will have to be met by the Claimant out of their damages. The only part of a premium which will remain recoverable, is that part of the premium related to the Claimant’s own expert fee expenses in clinical negligence claims. This acknowledges that in clinical negligence claims these expenses are often very high.
Currently, premiums for after the event insurance can run to tens of thousands of pounds for complicated clinical negligence cases which reach trial. It is envisaged that these premiums will be reduced by qualified one way costs shifting, meaning that the unsuccessful Claimant’s liability to meet the Defendant’s costs will be restricted, reducing the exposure for the insurer. However, LASPO does not include a provision for this and again there will need to be secondary legislation or court rules for this.
It is anticipated that General Damages awards will be increased by 10% to offset, in some way, the impact of Claimants having to pay insurance premiums and success fees from their damages. Again, however, LASPO has not included this and so further legislation or court rules will be required for this.
What does LASPO mean for Claimants in clinical negligence and personal injury cases?
The withdrawal of legal aid for clinical negligence cases except for severe child brain injury birth injury cases, may well mean that some Claimants with very good but difficult cases will be denied access to justice as solicitors will be unwilling or unable to burden the potential costs involved in investigating and pursuing such claims.
The removal of the right to recover the success fee and after the event insurance premiums in conditional fee agreement cases, may well mean that access to justice and litigation will no longer be “free” for Claimants. Claimants may well face a reduction in their damages to meet success fees and insurance premiums. This is bad news for Claimants who need future care and housing. In reality, these Claimants often rely on their general damages to “top up” their financial loss claims to cover the cost of future care and housing, due to the way that future loss and interest is currently dealt with by the courts.
Solicitors are likely to have to become highly competitive in terms of applying and recovering success fees and this may well mean that well deserving but expensive cases will not be taken on by solicitors, further limiting access to justice for Claimants.
Further secondary litigation and rules are required in order for it to become clear how LASPO will affect costs in personal injury and clinical negligence.