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NHS Resolution win saves NHS £270,000 upfront legal costs

16 March 2018

In a unanimous decision, the Court of Appeal has reversed the decision of Foskett J in three ‘bulk conversion’ CFA test cases [S v Barnet & Chase Farm Hospital NHS Trust, AH v Lewisham Hospital NHS Trust and Y v Doncaster & Bassetlaw Hospitals NHS Foundation Trust]. This is a huge vindication for the decision by NHS Resolution to take this point to appeal with significant financial ramifications for a number of claimant law firms.

 

By switching from legal aid to CFA-lite funding after liability had been admitted, Irwin Mitchell would benefit from ‘Additional Liabilities’, including success fees of up to 100% on top of the fees actually incurred and ATE insurance premiums, and the three Defendant NHS Trusts would be saddled with the expense. The injured claimants too would lose the benefit of a 10% uplift on general damages for pain and suffering (now referred to as the Simmons v Castle uplift) that they had otherwise stood to gain as a result of imminent (LASPO) changes to the rules on costs. Nevertheless in the Court below Foskett J had disagreed with three experienced costs judges, ruling that the decision to change funding was not the defendant’s business and that the 10% uplift would not have motivated a reasonable claimant to stick with LSC funding. It was this decision that NHS Resolution appealed despite criticism from a number of claimant lawyers.

 

The Court of Appeal has restored the original judgments. Irwin Mitchell’s advice to change to a CFA-lite in case there was not sufficient LSC funding to cover future legal work without clients making up the shortfall personally, was described as seriously misleading (“as in S, it appears that the client [in AH] was being advised of a substantial financial risk that was in reality non-existent”) amounting to a suggestion of illegal topping up. Other reasons given by Irwin Mitchell were dismissed as fanciful, exaggerated or not problematic. It appears their clients were not even told about the 10% uplift. The need for transparency was even greater here since Irwin Mitchell themselves were a beneficiary (arguably the main beneficiary) of changing to CFA-lite funding given they would enjoy success fees on their costs as a result. Whether the correct advice, properly nuanced to reflect pros and cons, would have changed the claimants’ decisions was not something the NHS Trusts had to prove; the onus was on Irwin Mitchell to prove the switch was reasonable and they had not.

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