But what's hardly ever mentioned is how grossly disproportionate the costs often are to the actual case. I assume the lack of press coverage is because the amount of the costs is never mentioned in the published judgment. It's usually negotiated between the two firms of lawyers, so very few people outside the trade would get to know.
However, occasionally there is a reported case about costs, and one such from the Court of Appeal is Springer v University Hospitals of Leicester NHS Trust [2018] EWCA Civ. However, before looking at it please read the rest of the post.
Reading the whole judgment is for enthusiasts only, but it's the details of the costs claimed that I'm concentrating on.
It was a fatal accident claim, where someone died of heart failure whilst undergoing treatment for a bowel disorder, allegedly as a result of negligence on the part of the NHS.
The claimant's solicitors, a firm called Kirwans from - no surprise here - Liverpool, dealt with the claim. When the solicitor dealing with it set up her own one woman firm, DHF Solicitors, she took the case with her.
The case never got anywhere near a trial. In fact, all that happened in procedural terms was that DHF sent the Claim Form (the formal court document that starts the claim running) to the NHS solicitors, and the NHS solicitors sent DHF their Defence. Two weeks later the claim was settled for £20k.
So bearing in mind the fairly modest amount of the settlement and the fact that all that had been done in court terms was for DHF to send the claim papers to the NHS and for the NHS to send their Defence what sort of figure would you expect DHF to have claimed as their bill?
I was tempted to do a poll, but I couldn’t work out how to integrate it into the post, and in any case I don't suppose anyone outside the trade would have much idea. But I would be interested to know what sort of figures people would have expected.
Trying to wear a layman's hat I'd probably have expected maybe £10,000 or so, maybe a bit more.
But the actual figure was ...
£115,880.74!
The breakdown is set out in paragraph 27 of the judgment. The basic charges for the time spent were £37,700 + VAT, which is pretty extraordinary in itself. But the real killer is the `success fee'.
Under the type of Conditional Fee Agreements in force at the time (now thankfully ended) if a solicitor `won' a case (i.e. recovered any money at all for their client) they were entitled to charge a success fee of up to 100% of their basic charges. So in this case the success fee meant that DHF were seeking not `just' £37,700 but an additional £37,700 success fee - a total of £75,400 + VAT!
Under that CFA regime the solicitors were also allowed to take out insurance against losing and their client being ordered to pay the other side's costs. This was an additional killer from the NHS point of view, as if the claimant `won' the premium had to be paid by the NHS plus the basic costs plus the success fee.
And because the insurers knew this the premiums were massive - in this case no less than £15,900.
So astonishing as it may seem, a basic bill of about £42,000 was quite legally inflated to well over £100,000.
And, of course, the NHS would also have had to pay their own solicitors.
In reality these CFA’s were legalised extortion. Faced with this sort of costs liability any defendant to a claim – not just the NHS – would settle even a very weak case just to stop the legal bill escalating into hyperspace.
This system used to be in place for all personal injury claims, and explains why so many spivs and shysters rushed into what had once been a fairly dull but respectable area of practice, and why there was so much TV advertising and attempts to get people to make claims, even if they were invented.
But the reason this case got to the Court of Appeal quite made my day. The solicitor dealing with the claim had forgotten (oops!) to tell the NHS that she was running the case on a CFA. This was an absolute requirement because of the financial threat that a CFA carried.
So when the bill went to court to be assessed the NHS picked up on the point, and the judge agreed with them that DHF couldn't claim either the success fee or the insurance premium, between them amounting to about £61,000!
She was, of course, not very happy, so appealed to the County Court judge. He dismissed her appeal, hence her trip to the Court of Appeal in London.
Who also dismissed her appeal
But this is not an isolated incident. Legal bills that are several times the amount of the settlement are commonplace, and the entire system is a disgrace. I used to practise in personal injury before these absurd CFA's were introduced, and in those days bills like this were completely unheard of.
It's ironic that CFA's were only introduced because the Government, in one of the most short-sighted and stupid decisions ever, abolished legal aid for personal injury claims. By doing so they turned personal injury litigation into a legalised extortion racket.
In 2016/17 the amount the NHS paid out to solicitors like DHF and their ilk amounted to £500 million. Perhaps it’s therefore time to take lawyers out of the system altogether and have compensation decided by an independent tribunal. Or maybe introduce a `no fault’ scheme, where injured patients receive compensation without having to prove negligence.
Almost any alternative has to be better than this.