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What's next for fixed costs?

View profile for Janina Muromceva
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Many clinical negligence litigators may have breathed a sigh of relief following the Department of Health’s consultation released on 30 January 2017 that fixed costs in clinical negligence claims should only be introduced for claims where damages do not exceed £25,000.00; it had been feared that the bar could have been set as high as £250,000.00.  The consultation paper named “Introducing Fixed Recoverable Costs in Lower Value Clinical Negligence Claims” was published to that effect and the deadline to respond to the same is 1 May 2017.  The consultation can be found here.

In what has been seen as a victory for Claimant lawyers, the DOH in its consultation has noted the legitimate concerns about access to justice raised by bodies such as The Law Society, Association of Personal Injury Lawyers and Action against Victims of Medical Accidents.  The DOH stated that the level has been proposed at claims up to £25,000.00 as these were the cases where there was the greatest disproportionality between costs and damages; it should be noted that the proposed fixed costs would cover around 60% of settled claims against the NHS.     

The consultation paper suggests that 36% of total costs of clinical negligence claims against the NHS relate directly to costs of litigation. It further states that for claims under £25,000 the claimant’s recoverable legal costs were on average 220% of damages awarded. In addition it has been observed that litigation costs for claims between £1,000 and £10,000 increased by 51% of damages awarded between 2013/14 and 2015/16 (237% of damages in 2013/14 and 324% of damages in 2015/16). According to the Department of Health the above figures demonstrate that the overall costs of clinical negligence is high and rising and that recoverable costs are disproportionate to damages awarded. It is therefore suggested that introduction of the fixed recoverable costs for low value clinical negligence claims would tackle the issue of rising litigation costs; would improve predictability for costs and budget planning for both claimants and defendants; would reduce Court time on deciding recoverable costs; would support better cost management for all parties and more importantly the savings achieved, £42m by 2020/21, could be used to deliver frontline patient care.

Whilst some have welcomed the proposals those representing Claimants do still have serious concerns. In response to the consultation paper Action against Medical Accidents (AvAM) published their initial reaction to the Government’s proposal. AvAM Chief Executive Peter Walsh said: “We would never condone solicitors claiming over-the-top legal fees, but this is rare and is already controlled by the courts.  The NHS Litigation Agency is also able to challenge costs where there is a case for doing so.  In our experience, high costs are usually a result of the NHS not investigating incidents properly and dragging out claims with unreasonable denials of liability.  However, the proposals have taken no account at all of defendant behaviour unnecessarily escalating costs.  Instead of making it harder for claimants to challenge NHS denials, the Department of Health should insist on better investigation of incidents and early admission, with strong penalties if this does not happen."

AvMA is also concerned that the proposals threaten access to justice to all who have been affected by negligent treatment. It was suggested that low value claims would typically include stillbirths, child deaths and deaths of older people and although these cases might not involve high levels of compensation it could still be serious and complex and that these Claimants may not be able to find lawyers to take on their cases given that the fixed costs proposed would most likely not cover the legal costs required to pursue the claim

A fixed recoverable costs regime is already applicable to most claims within the small clams track, with only a few exceptions and all RTA, EL/PL claims that fall under fast track with a financial value not exceeding £25,000. It has been clear that there has been much appetite from the judiciary that fixed costs should be extended much further.  Lord Justice Jackson voiced his intentions clearly in the IPA annual lecture in January 2016 entitled ‘Fixed Costs – the time has come’ in which he stated that he considered that fixed costs should be implemented for all fast track cases and for cases at the lower end of the multi track up to a value of £250,000.00.  LJ Jackson considered that reform would benefit certainty, predictability and proportionality of costs which would help to promote new routes to funding and in turn promote access to justice.

On 11 November 2016 it was announced that LJ Jackson had been commissioned to undertake a review of fixed recoverable costs to be completed by 31 July 2017.  The Law Society, in a press release, stated that whilst it did not oppose the principle of fixed recoverable costs for lower-value and less complex claims; it considered the application of fixed costs for highly complex cases was likely to be wholly inappropriate and would affect the ability of many people to access justice.  It was noted that the proposed cap of claims up to £250,000.00 represented a tenfold increase in the current limit for claims subject to fixed costs. This would include cases where people have been seriously harmed and where the application of fixed costs would be inappropriate and would affect people’s ability to access justice.  Such a ‘one size fits all’ approach for all cases, regardless of complexity, will make many cases economically unfeasible, undermining the principle of justice delivering fairness for all.

It seems almost certain that there will be an extension to the fixed recoverable costs scheme, however, given the Department of Health's proposals to only fix costs up to claims worth £25,000.00 in clinical negligence matters it remains to be seen whether the regime will cover claims up to £250,000.00 as has been mooted.

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