PROVING THINGS 150: CLAIMANT FAILS TO ESTABLISH THAT THE MOVE FROM LEGAL AID TO CONDITIONAL FEE AGREEMENT WAS A REASONABLE STEP

In YZ v Gloucestershire Hospitals NHS Foundation Trust [2019] EWHC B4 (Costs) Master Gordon-Saker found that the claimant had not established good grounds for changing from legal aid to a conditional fee agreement.   Although this is a costs issue, it demonstrates an example a failure to prove things. The claimant did not have the evidence available to establish this was a reasonable step.  Evidence of a letter to the client and/or an attendance note may have helped considerably.

 

” The telling point is that there is no record at all of the litigation friend being advised that the Claimant would lose the chance of recovering the 10 per cent uplift in general damages or of any advantages that may outweigh that disadvantage. I cannot be satisfied that had the litigation friend been advised properly, not only as to the Simmons v Castle uplift but also as to the true legal aid position, that her decision to relinquish legal aid and to enter into a conditional fee agreement and purchase an after the event insurance policy would have been the same.”

THE CASE

The minor claimant was bringing an action against the defendant. The claimant initially had legal aid.  In February 2013 the claimant, by her litigation friend, entered into a conditional fee agreement. This provided for a 100% success fee. An after the event insurance policy was obtained at a cost of £50,000 plus insurance premium tax.

THE ISSUE

The claimant’s bill claimed the additional liability and the cost of the insurance premium. The amount in dispute was £292,298 (plus vat).

The Master was asked to determine the reasonableness of the decision to move from legal aid funding to a conditional fee agreement.

 

 THE MASTER’S JUDGMENT

The Master held that the claimant had not established that it was reasonable to make the change from legal aid to the conditional fee agreement.
“37. The advantages and disadvantages identified by Mrs Oaten are:
  1. i) The risk that legal aid funding might be withdrawn if the prospects of success were not improved.
  2. ii) The difficulty in finding supportive experts at the prescribed legal aid rates.
iii)                 The Claimant’s liability under the statutory charge for costs not recovered from the Defendant.
  1. iv) The Claimant’s difficulty in making the monthly contributions under her legal aid certificate.
  2.  There is simply no evidence that there was a specific risk in this case that legal aid funding would be withdrawn. Leading counsel’s risk assessment dated 11 th January 2013 for the purposes of his conditional fee agreement, which has been disclosed, put the prospects of success at 55 per cent.
  3.  Clearly there was a difficulty in funding the experts. There was no difficulty with Mr Fox, the Consultant Obstetrician and Gynaecologist, who was willing to charge at the prescribed rate of £135 and provide breakdowns of the time spent. Even after the move to a conditional fee agreement, he continued to charge at similar rates (£130-£140).
  4.  The difficulties lay with Professor Brown and Professor Kischka. The prescribed rates for neurologists under the 2007 Funding Order were £90 in London and £153 outside London. Professor Brown is based in London and, from the fee notes served with the liability bill, was charging £300 per hour. Professor Kischka was based in Oxford and, from the fee note served with the quantum bill, was charging £200 per hour.
  5.  No evidence has been produced of any application to the Legal Services Commission under article 5(2)(e)(ii) of the 2007 Funding Order to allow increased rates on the basis of the seniority of the expert required (see paragraph 2 of section 2 of schedule 6 of the 2007 Funding Order).
  6.  Instead Mrs Oaten’s approach seems to have been simply to press the Legal Services Commission to approve the experts’ fees despite the fact that they appeared to be charging in excess of the prescribed rates. It is difficult to understand why, before instructing these experts, Mrs Oaten did not seek prior authority under article 5(2)(e)(ii) for the rates that they were seeking. It is also difficult to see why, having not done that, Mrs Oaten did not provide the explanation suggested by Mrs Parcell in her email dated 14 th January 2013:
… obviously the more evidence you can provide e.g quotes and an explanation as to why this expert needs to be instructed then the more luck you may have.
  1.  The result is that I cannot be satisfied that the difficulty in obtaining authority from the Legal Services Commission for the payment of these two experts is not something that could have been resolved had Mrs Oaten approached it in a different way.
  2.  Prescribed rates for experts were introduced by the Community Legal Service (Funding) (Amendment No.2) Order 2011, which amended the 2007 Funding Order. Article 13 of the Amendment Order provided that it did not apply where the application for the certificate was signed before 3 rd October 2011 and the application was received by the Commission before the expiry of 7 days after that date. The chronology of the legal aid applications in this case emerged only during the course of the hearing and the parties did not address this point in detail.
  3.  I have proceeded therefore on the footing (as apparently did the Claimant’s solicitors) that prescribed rates did apply in this case. If they did not apply, my conclusion that I cannot be satisfied that the difficulty in obtaining authority to pay the experts could not have been resolved would stand but I would get there by a more direct route. There would have been no need for an application under article 5(2)(e)(ii) of the 2007 Funding Order to allow increased rates.
  4.  As to funding generally the evidence was somewhat confusing. During the course of the hearing the legal aid certificate was handed up to me and I explained the limitations on it. On the face of the certificate, there was an initial costs limitation of £7,500 which was increased on 5 th July 2012 to £15,000.
  5.  However in order to understand the legal aid position properly I have had to read through the Claimant’s solicitors’ files and to look at documents which are privileged and which have not been disclosed. Having done that I am not satisfied that there was a difficulty in pursuing the claim with legal aid funding. The limit of £15,000 was intended to cover the conclusion of stage 1 and the service of proceedings. The Claimant’s solicitors made an application for stage 2 funding on 22 nd October 2012 (as referred to in Mr Dunne’s skeleton argument). The Commission would not authorise the instruction of a care expert, as normally quantum reports would not be authorised until an admission of liability or offer of settlement had been made. However there is nothing to suggest that the request for stage 2 funding was chased up.
  6.  I cannot therefore accept Mrs Oaten’s assertion in her fourth witness statement that stage 2 funding had been exhausted. Rather it seems to me that stage 1 funding had been exhausted and that stage 2 funding had been requested but not approved at the time that the decision was made to move to a conditional fee agreement. It seems to me that the fact that a care expert could not be instructed at this stage was not a disadvantage to the Claimant. There was no realistic prospect at this time that the Defendant would make a part 36 offer on quantum which would have costs consequences.
  7.  As to the statutory charge the Claimant would of course be liable for costs charged by her solicitors and not recovered from the opponent. In practice, in my experience, solicitors acting for children and protected parties generally waive their entitlement to costs which would otherwise fall to be deducted from their damages. In paragraph 29(e) of her fifth witness statement Mrs Oaten explained that, as a matter of policy, her firm did not recover from their clients costs due under pre-April 2013 conditional fee agreements which were not recovered from the opponent. It seems to me that the potential liability of the Claimant under the statutory charge would be no different from the potential liability under a conditional fee agreement. The statutory charge is unlikely to have been a particular disadvantage to this claimant.
  8.  In moving to a conditional fee agreement the Claimant would avoid the need to make monthly contributions. These had increased to £29.66 per month (£355.92 pa).
  9.  There is however no real evidence that this was a factor of significant importance to the Claimant. In the attendance note dated 18 th September 2012, it is recorded that the Claimant commented that she was still making contributions and that the Commission was continually reassessing the amount she paid. In the attendance note dated 15 th January 2013 it is recorded that Mrs Oaten told the litigation friend that the Claimant would not have to pay further contributions once legal aid was withdrawn.
  10.  It seems to me that the disadvantages of moving from legal aid to a conditional fee agreement were  the loss of opportunity of recovering the Simmons v Castle uplift put, on the Claimant’s case, as a 55 per cent chance of recovering £17,500, the loss of costs protection, and the contractual liabilities which the litigation friend assumed under the conditional fee agreement.
  11.  Although they are not irrelevant, I would not place too much emphasis on the last two. Provided that adequate after the event insurance was purchased, the loss of costs protection under s.26 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, would not be a significant factor. The conditional fee agreement has not been disclosed. However, as is implicit from sub-paragraph 29(e) of Mrs Oaten’s fifth witness statement, it was not a CFA-lite and the Claimant, through her litigation friend, would be liable for all of her solicitors’ charges (including a liability for basic charges if a part 36 offer was not beaten), whether or not they were recovered from the Defendant. Again, given Mrs Oaten’s evidence that in practice her firm did not seek to recover shortfalls from their clients, I would not treat this as a particularly significant factor. Whether counsel would have taken a different view in relation to any shortfall on his fees is unknown.
  12.  However all of these factors, varying as they do in degrees of significance, should have been explained carefully to the litigation friend. I would expect to see a detailed note of the advice that was given. I would also expect to see that advice repeated in a letter, so that the litigation friend would have an opportunity to consider it properly. Changing from legal aid to a conditional fee agreement was a significant step which would create a new relationship between the litigation friend and the solicitors and create contractual obligations on the part of the litigation friend, whatever the risk that those obligations would be enforced in practice.
  13.  Based on the evidence that has been produced I cannot conclude that the litigation friend was advised properly as to the change in funding. The meeting on 18 th September 2012 was nearly 5 months before the conditional fee agreement was entered into. The change in funding was then only a possibility. An explanation of “the advantages and disadvantages of a CFA”, even if comprehensive, is unlikely to be recalled 5 months later. The telephone conversation with the litigation friend on 15 th January 2013 was recorded as 30 minutes long. I have difficulty in accepting that detailed advice could have been given on everything that would have been required in that time. The result of that conversation was that the litigation friend was persuaded that “we do not have any [other] option”. But, it seems to me, that was not correct.
  14.  The telling point is that there is no record at all of the litigation friend being advised that the Claimant would lose the chance of recovering the 10 per cent uplift in general damages or of any advantages that may outweigh that disadvantage. I cannot be satisfied that had the litigation friend been advised properly, not only as to the Simmons v Castle uplift but also as to the true legal aid position, that her decision to relinquish legal aid and to enter into a conditional fee agreement and purchase an after the event insurance policy would have been the same.
  15.  On the evidence that has been produced I cannot be satisfied that the litigation friend’s decision to change from legal aid funding to a conditional fee agreement and thereby to incur the additional liabilities now claimed was a reasonable one or was to the advantage of the Claimant.”