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Changing Funding - The New Black

29 June 2017

Publish Date: 30 Apr 2016

Defendants have had a recent run of successes in arguing that it was unreasonable for a solicitor to change from public funding to a CFA pre-Jackson.

In Surrey v Barnet & Chase Farm Hospitals NHS Trust [2015] EWHC B16 (Costs), the advice given to the Claimant was not comprehensive, particularly in relation to the 10% uplift that was charged on his damages by changing to a CFA, even though the CFA in this case was a CFA Lite.  In light of this, the change from Public Funding was ruled by Master Rowley to be an unreasonable one and the additional liabilities were, therefore, not recoverable.

In Yesil v Doncaster & Bassetlaw Hospitals NHS Foundation Trust [2015], the Claimant’s solicitor again failed to give comprehensive advice, in particular in relation to the 10% uplift that would be charged on his damages by changing to a CFA.  District Judge Besford held that, “In my judgement it is inconceivable that a client would not consider the option of an additional 10% uplift on general damages a material factor. The omission to raise this factor, even if the claimant immediately rejected it, seriously calls into question the adequacy of the advice given”. The additional liabilities were therefore disallowed.

This was also reflected in AH v Lewisham Hospital NHS Trust [2016] EWHC B3 (Costs), where the advice in relation to the 10% uplift was, again, lacking, with Deputy Master Campbell deciding that, “What the client should have been told was that "if you move to a CFA you will forfeit immediately the right to an additional 10% of the general damages you recover, which we estimate could be £175,000, so as much as £17,500". It was therefore advice that was unreasonable”. 

In Ramos v Oxford University NHS Trust [2016] (SCCO), Master Leonard observed that, as a principle, "A decision to choose a CFA/ATE arrangement rather than LSC funding (where available) must have been a reasonable decision.  If it was, then the additional cost attendant on that choice will (insofar as reasonable in amount) be recoverable from the paying party.  If not, then CPR 44.4 will preclude recovery of the additional costs unreasonably incurred". In the Ramos case the Master considered that the Claimant had not been given the proper advice and therefore disallowed the success fees. 

Likewise, in Davies v Wiltshire Primary Care Trust [2016] (SCCO), the solicitor changed from Public Funding to a CFA in 2009, however, Master Leonard again considered that there was insufficient advice provided to the Claimant in relation to their liability for the additional liabilities in the event of a shortfall. Therefore, the decision had not been a reasonable one and the additional liabilities were disallowed.

However, there is always at least one fly in the ointment and here it comes in the form of AMH v The Scout Association [2015] (SCCO).  Master Leonard again considered the issue of the change from Public Funding to a CFA Lite and even though he considered that the advice given to the Claimant was incomplete, he ultimately concluded that the decision to change from Legal Aid to a CFA was reasonable.  The reasoning appears to be that as the client was transferred to a CFA Lite, there was no risk of deduction from damages and whilst the advice was brief, it was accurate and focused on preserving the client’s damages. Therefore, the additional liabilities were allowed.

And it is not alone, in LXM v Mid Essex Hospitals Services [2010] EWHC 90185 (Costs), the change from legal aid funding to a CFA was also considered a reasonable one.  In that case, the Claimant was provided with appropriate advice in respect of the change and Master Gordon-Saker concluded that, “the conditional fee agreement route would be obviously more advantageous to the Claimant because the only impact of costs on her damages will be the unrecovered Legal Aid costs in Leigh Day's bill”.

Likewise, in Hyde v Milton Keynes Hospital NHS Foundation Trust [2015] EWHC B17, the Solicitor chose to change from Legal Aid to a CFA because the funding on the certificate had been exhausted and the LSC refused to extend it.  Master Rowley considered that, in the circumstances, such a change was entirely reasonable and allowed the additional liabilities.  That decision was recently upheld by Mr Justice Soole on appeal (Milton Keynes Hospital NHS Foundation Trust [2016] EWHC 72 (QB)).

Whilst it would appear that Slater & Gordon and Irwin Mitchell (the main two firms against whom many of the decisions so far have been made) have at times failed to give proper advice, it is not necessarily the case that every solicitor has.

Further, there are more factors in question as to whether the advice was adequate, and not all the decisions are uniform – for example, the contradictory way in which the courts dealt with the cases involving CFA Lites. It is therefore not clear whether the trend of disallowing the additional liabilities will continue, or whether only some firms will be adversely affected.

What is clear, however, is that the challenges where such a funding change has taken place will continue and at times will succeed, no doubt resulting in further appeals involving these issues in the future.

What is clear, however, is that the challenges where such a funding change has taken place will continue and at times will succeed, no doubt resulting in further appeals involving these issues in the future.