The Judge disallowed success fees and an ATE insurance premium claimed by national firm Irwin Mitchell. This is one of the first cases of its kind that addresses the situation where a Claimant transferred from Legal Aid funding to a Conditional Fee Agreement just prior to the abolition of recoverable success fees and ATE insurance premiums.
AH v Lewisham Hospital NHS Trust was a clinical negligence claim where the claimant was legally aided. However, at the end of March 2013, just before the new rules came into force on 1 April stopping a Claimant's entitlement to recover CFA success fees and ATE premiums, and after the Trust had made a partial admission of breach of duty and causation and an offer, the Claimant discharged legal aid and entered into a CFA with a success fee of up to 100% with Irwin Mitchell. Following settlement of the claim, an 80% success fee was claimed together with the insurance premium.
After hearing evidence from Irwin Mitchell the Judge found that when advising their client about the possible change they had not mentioned the case of Simmons v Castle, a case where the Court of Appeal had ruled that unless a CFA was entered into prior to 1 April 2013 the Claimant would be entitled to a 10% increase in general damages, which in this case was estimated to be £17,500. The Irwin Mitchell fee earner giving the advice had not been aware of the case and she had not been told about it by her supervisors when they had asked her to review all her Legal Aid matters prior to 1 April. The Judge found that the adequacy of advice was a relevant factor, and the choice should be shown to be objectively reasonable based on the advice. He concluded that because of the failure to explain the Simmons v Castle consequences "a very significant component was missing" from the advice.
Accordingly the Judge decided that the Trust had no liability to pay the success fees and ATE premium.
The Judge also stated that in any event Irwin Mitchell’s claim for an 80% success fee was excessive. If Irwin Mitchell's success fee had been recoverable, it would have been reduced to 40%. If Counsel’s success fee had been recoverable, it would have been reduced from 67% to 30%.
Healthcare partner Rob Wilson commented that this is an important precedent for the NHSLA and other clinical negligence defendants. There are many cases waiting in the wings where Claimants have transferred from Legal Aid Funding to a CFA just prior to 1 April 2013. The nature of the advice given to the Claimant will be crucial. As in this case, if a Claimant's choice is not found to be objectively reasonable based on the advice given then any success fees and ATE premium claimed should be disallowed.