Costs War Is Over (if you want it)


More or less any Solicitor involved in conditional fee work will have been accused, at one time or another, of a technical breach of the provisions of LAPSO prior to it coming into effect on 1 April 2013. Invariably, it will be said that such breach disentitles the solicitor to all or a significant proportion of his or her costs.    

The three clinical negligence cases of Kai Surrey, AH and Yesi concerned just one such issue. 

It was accepted that the claimants solicitors, Irwin Mitchell, had failed to advise their clients of the fact that by switching to conditional fee agreements from legal aid, they would forgo the 10% uplift in general damages which formed part of these reforms. 

The NHSLA leapt on this oversight; surely this was a naked attempt to secure additional liabilities, amounting here to in excess of £100,000 at the expense of the clients?  The costs judges at first instance certainly agreed. 

In fact and as the High Court has now pointed out, there could have been no complaint had the claimants signed up to CFA's at the outset. Nor did LAPSO incorporate anti avoidance provision, outlawing the tactic. 

Most significantly though,  the costs judges had overlooked the fact that the approach pressed for by the NHSLA would have garnered the claimants an extremely modest if any gain. By switching to CFA's, they had eliminated the risk of the statutory charge attaching to any part of their damages, mitigated the potential effect of a Part 36 offer and sidestepped the legendary difficulties associated with being answerable on an on-going basis to the LSC. In the real world, these issues were of far greater concern to the clients and their litigation friends, especially in circumstances where the lost uplift was limited to general, rather than the far more significant special damages eventually awarded. 

Finally, the fact that the advice had not been offered was a matter between Irwin Mitchell and their clients; it was of no concern to the paying party. 

I would submit that the key point to be taken from the judgment of Foskett J is found in the following extract:

"Without sacrificing entirely the possibility of a proper challenge to a changed funding arrangement that is demonstrably improper or seriously prejudicial to a defendant for no good reason, any return to such [cost war] days must be resisted strongly.”

In other words, take a very good point indeed or don't bother taking it at all. 

One can only hope that the same clarity of thinking is applied to the vexed issue of whether conditional fee agreements can be validly assigned from one law firm to another, shortly to be addressed in Budana v Leeds Teaching Hospitals NHS Trust, which has just been leapfrogged to the Court of Appeal.

Imagine there's no cost war, it's easy if you try...

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The High Court has overturned three high-profile costs rulings in which Irwin Mitchell lost the right to recover success fees and insurance premiums from defendants after failing to advise on the 10% uplift in general damages before switching clients from legal aid. Mr Justice Foskett, sitting with the Senior Costs Judge Master Gordon-Saker as assessor, was clear that he wanted to avoid a return to the “bad old days” of the costs wars in the early 2000s, and ruled that in each case staying on legal aid and claiming the 10% would only have achieved a marginal gain.
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