Clinical Negligence Fixed Costs up to £25,000 Explained

In addition there will be a bolt on of £1,800.00 for cases involving Protected Parties or Children. 

 

So the maximum recoverable amount for a non-Protected Party/children standard track case would be £14,500.00. 

 

For a light track case the maximum amount would be £8,375.00. What can be gleamed is that the difference between light and standard track costs can be sizeable.  

 

 

 

Where a claim exits the LVCD portal because the Defendant has not responded to the Letter of Claim within 6 months then the applicable costs are those which apply to the applicable track. If this happened and the claim settled pre-issue and the court held the case was suitable for the Fast Track then the maximum a Claimant can recover on fast track is £6,350.00. This could be lower than the costs on the LVCD scheme. This cannot possibly be right yet the government’s report sets out this scenario. 

 

The other interesting scenario is where the claim is an Intermediate Track claim. The staging here applies from the outset up to the service of the Defence. The reforms envisage where cases are issued that the applicable fixed costs apply for the appropriate track. So what costs does a party get post-issue where the Intermediate Track is the applicable track? Do they get the LCVD costs plus full S1 costs or are the S1 costs to be apportioned? The government state they will seek to address this issue pre-implementation but there are no answers yet. 

 

And again even Intermediate Track throws up another spanner. For a claim settling at the LCVD upper limit of £25,000.00 on the Intermediate Track for pre-action you’d get £2,350.00 on Complexity Band 1, on Complexity Band 2 you’d get £6,500.00, on Complexity Band 3 you’d get £7,900.00 whilst on Complexity Band 4 you’ll get £11,300.00. Bearing in mind these figures cover work up to the date of service of the Defence, under the LCVD protocol you’d get up to £8,375.00 on light track and £14,500.00 on the standard track for the equivalent claim.  

 

So to go back to how you deal with the IT post-issue costs, will the government allow anything at all if the costs are lower on all of the Intermediate Track complexity bands? The arithmetic makes no sense. 

 

 

 

The government is pressing ahead with plans so that all Clinical Negligence claims that settle or have a judgment value of between £1,501 to £25,000.00, irrespective of the claim valuation will be subject to the fixed costs under the LDFRC scheme. 

 

This is significant. The government state that ”if a claim is overvalued at the outset but subsequently settles in the £1,501-£25,000 range it will be subject to costs under the LDFRC scheme, whether or not the process set out in the LVCD pre-action protocol has been followed for that claim.” 

 

This will inevitably lead to satellite litigation around whether or not a claim was reasonably valued and puts significant pressure on Claimant representatives to be able to accurately value a claim at the outset. Make no bones about it, the onus is on Claimants to value a claim accurately. 

 

The government wrongly state that this approaches follows other FRC schemes. This is incorrect. Where a claim is reasonably valued over the applicable upper limits on existing FRC schemes then the costs fall outside of fixed costs, irrespective of the claim or settlement value. 

 

There is also notably, no clarification as to what happens where there is contributory negligence. Is the settlement or judgment value the net or gross amount? Clearly this is important. The October reforms do not address this issue at all so will the LDFRC? 

 

Theoretically an issued claim that was valued over £25,000.00 could see pre-issue costs restricted to LDFRC instead of the applicable fixed costs. More satellite litigation. 

 

 

There are exclusions to the LDFRC scheme. Where a claim is excluded then they will not follow the LVCD protocol. Instead they will follow the existing Pre-Action Protocol. Claimants will be required to set out why a claim is exempt in both their Letter of Claim and in the Particulars of Claim. 

 

The exclusions are as follows: 

 

 

What is notable is that the expert exemption relates to liability only and actually sees the number of experts increased from the consultation which was previously 2 experts. 

 

The multiple defendant exemption is much stricter than the October reforms. 

 

There are no exemptions for fatal claims. Protected parties and children are also not exempt. 

 

 

Children and Protected Parties are not exempt, instead a bolt-on of £1,800.00 will be allowed in addition to the fixed costs. 

 

This does not sit with the MoJ’s October reforms which exempt Protected Parties completely from fixed costs. 

 

So under these rules a Protected Party could be restricted to fixed costs in the pre-issue stage but cannot be subject to fixed costs post-issue. 

 

There will be real concerns over the impact on access to justice to claims involving children and Protected Parties. 

 

The government is going to consult on the mechanism for recovering disbursements in addition to the bolt-on. Presently it’s unclear if additional essential disbursements would be allowed. Patently in light of the Court of Appeal decision in Santiago provision must be allowed to ensure access to justice. 

 

If this is not sufficiently altered then expect these provisions to be challenged. 

 

 

The new protocol will begin with a Letter of Claim. It will end when 28 days have passed following neutral evaluation, the claim has settled, the claim has been discontinued, the parties agree not to proceed with a neutral evaluation or the Defendant does not agree to neutral evaluation. 

 

If limitation is raised or the Defendant fails to respond to the standard track Letter of Claim within 6-months then the claim exits the LVCD. 

 

 

The reforms will see the introduction of standard and light tracks (though the wording may be changed). This carries through from the original consultation. The applicable fixed costs will vary depending upon the track. Given this is a pre-issue procedure then it could well give rise to satellite litigation where the parties disagree as to the appropriate track. 

 

It is for Claimants to determine which is the most appropriate track. The government believe it will apply to around 25% of applicable claims. 

 

The light track will apply if: 

 

 

Claims will be confirmed on the light track at the point liability is admitted by the Defendant. This admission must be made within 8 weeks of receipt of the Letter of Claim. 

 

 

Where a claim moves from the light track to standard track there will be no abortive costs for the Claimant. This will occur where a Defendant responds to the Letter of Claim within 8 weeks but then does not provide an admission of breach of duty, and an admission that the breach caused loss. The government state that the higher recoverable costs on the standard track will compensate Claimants. The only exception is where the Defendant fails to respond within 8 weeks. In these scenarios the Claimant will get 5% of light track stage one costs on top of standard track costs. 

 

For clarity, where a claim starts on the Light Track and falls out of it, it will then restart on the standard track. 

 

In addition, where a claim starts on the standard track, if the Defendant makes admissions of breach of duty, and an admission that the breach caused loss within 8 weeks of receipt of the Letter of Claim then the claim will be transferred to the light track and only light track costs will be recoverable. 

 

On the Light Track Claimants will be entitled to an interim payment within 28 days of receipt of the light track Letter of Response equivalent to the light track stage one costs. 

 

Also on the Light Track where expert evidence is needed then where possible, the evidence should be limited to a single report by an expert jointly instructed. 

 

 

The standard track process is as follows: 

 

New template Letter of Claims will be included in the protocol but their use will not be mandatory. 

 

The standard track letter of claim must include a detailed breakdown of the value of the claim setting out general damages and details of any pecuniary losses supported by a statement of truth. The Letter of Claim must be accompanied by an index of the Claimant’s medical records with a copy of the core records which are to be collated, sorted and paginated by the claimant. Any breach of duty and condition & prognosis expert evidence, up to 2 witness statements and an offer to settle the claim. 

 

There is no formal restriction on the length of expert reports or witness statements but their length and detail should be proportionate to the claim. 

 

 

The Light Track process is set out as follows: 

 

 

The requirements for the Letter of Claim are the same as on the standard track save that it should include an explanation as to why the claim is suitable for the light track. 

 

As above their will be a template Letter of Claim in the protocol which is not mandatory. Moreover, expert and witness evidence will not have any restrictions but should their length and detail is expected to be proportionate to the claim. 

 

 

The reforms include costs penalties and sanctions. These are as follows: 

 

The government say the sanctions will be considered in the first year of implementation and altered if necessary. 

 

 

It will be open to any suitably experienced legal professionals including barristers, solicitors and others with sufficient impartiality to take on the role as an evaluator. Evaluators will be instructed jointly. The party proposing an evaluation will be expected to offer 3 prospective evaluators with the responder choosing one of the 3. If none can be agreed then the responder can counter proposed 3 alternative evaluators. If the choices are refused then the refusing party needs to explain the basis for its refusal. If there’s still no agreement then a Protocol Referee can assist. 

 

Initially it was proposed to split the evaluator’s fee but it has now been decided it will be fully funded by the Defendant. 

 

There will be sanctions for parties who unreasonably refuse to engage in the process. A reduction in recoverable costs of 50% may be applied. If the Defendant refuses, this ends the Protocol and the claimant may issue proceedings. 

 

If neither party believes evaluation is appropriate then it is open to the parties to engage in settlement offers or issue proceedings. 

 

It is a paper based process. If one party wishes to proceed to evaluation, evaluation should proceed. Evaluation is expected to be provided within 4 weeks and will be an opinion upon the likely outcome of liability, quantum or both aspects of the claim. 

 

Evaluation fees will be as follows: 

 

Where a party proceeds to trial after neutral evaluation, if the Claimant does not obtain a judgment at least 20% greater then the amount recommended for settlement, a 50% reduction to the fixed recoverable costs will apply. 

 

 

Rather shockingly, where protective proceedings are issued due to limitation, only the issue fee will be recoverable. No costs will be allowed relating to issuing or seeking an order to stay the claim will be separately recoverable where the LVCD protocol process in either track has not been completed. 

Parties can agree to extend limitation but if the Defendant will not do so then the only cost consequence it faces is the issue fee. This cannot possibly be right or fair. 

 

 

In a potentially significant culture shift for many Claimant practitioners, the LVCD protocol will require Claimants to make an initial offer of settlement at the same time as the Letter of Claim. There is a clear drive to keep these claims out of the courts. 

 

 

Clinical negligence claims which includes grounds under the Human Rights Act 1998 will be subject to the LVCD protocol and the applicable fixed costs. 

 

 

Where a Defendant can recover costs (i.e. post issue) then the Defendant costs will be calculated by reference to the agreed damages at settlement or following judgment. If QOCs is disapplied and there are no damages then it will be calculated by reference to the amount of damages specified in the Letter of Claim. 

 

 

Where a Claimant lives, works or carries on business in London and instructs a legal representative who practises in London then there will be a 12.5% uplift to be applied to the applicable fixed costs. 

 

 

Recovery of disbursements currently remain uncertain. There is a consultation which is open until 27 October. Details of this and how to respond are here.  

 

Only 98 responses were received to the main consultation, will more be received for this? 

 

The headlines: 

 

Notably no clarity on medical agency fees where expert fees are concerned. 

 

The proposals are shocking and will see a complete restriction on costs together with a highly restrictive disbursement regime which goes significantly beyond what we have ever seen before on fixed costs regimes. This will undoubtedly have consequences for access to justice. 

 

On the Fast & Intermediate Track disbursements are recoverable so long as they are reasonable & proportionate and not referred to specifically within the applicable rules. Why do the LVCD proposal seek to go beyond this? 

 

You would expect them to follow the process of the Court of Appeal decision in Santiago to allow disbursements which are necessary for access to justice but given some of the comments in this report, it looks like there will be no additional allowance for things such as translation and intepretation expenses. The government's initial view appears to be that the bolt-on is sufficient to cover the solicitor and any expenses.  

 

 

The next steps in implementation will be for the government to submit draft rules for consideration by the CPRC. They are hoping for April implementation. Given the mess with the October reforms and the limited time for parties to consider and get to grips with the same, any implementation that swift is unlikely to be smooth as they suggest. 

 

The government have also confirmed that there will be a further consultation which will focus on disbursements and provisions for the same within the LDFRC scheme. 

 

A post implementation review will take place within 3 years of implementation. It will consider the impact of the reforms and whether the aims have been met. It will also seek to address any unintended consequences. 

 

They will look at ways to take into account inflation and will work the CPRC on this. There is no ruling out of possibly extending the upper limit in future. 

 

A shocking statistic in the report comes from the Society of Clinical Injury Lawyers with 70% of their polled members revealing they would withdraw from the market on the basis of the previously recommended proposals. The further proposals and details given are unlikely to have altered this figure leading to serious and real concerns over access to justice. 

 

The government’s view is that the new process will reduce the time spent and speed it up. They accept there will initially be additional costs, though state they believe that existing familiarity with fixed costs in other PI cases will mean such costs could be minimal. I think most would take issue with these statements. 

 

They openly admit that small firms will be less able to compete and will be disproportionately impacted by these reforms given the economies of scale of larger firms and their abilities to provide services ‘en-masse’ (i.e. Defendant firms). To see the government include in an official report an open acceptance that their reforms will inhibit the ability of representatives to undertake legal representation is damning. It is an open admission that these reforms will reduce and restrict access to justice. This is unacceptable. But concerns may be alleviated because the government “remain convinced there is a good economic case for making the proposed changes”. 

 

Looking at the 100-page report it goes significantly farther then the October reforms. To be blunt these proposals will impact access to justice for lower value clinical negligence claims. The fact that the LCVD costs will apply based on settlement values removes certainty for parties. 

 

It’s reasonable to expect that there will be significant opposition to these reforms and if Judicial Review proceedings are launched it would be an entirely expected development. 

 

There is a lot of detail to work through and we do not yet have the draft rules which will need to be worked through again. The proposals in the disbursement consultation are the most restricitve we have seen. We would encourage practitioners to respond to the consultation by 27 October. 

 

For all we know there is a lot we don’t. What this report does is to put cost above everything else. The report is brutal and again raises questions not just about access to justice but access to quality access to justice. 

 

At the end of the day these reforms will have a greater impact upon victims, they will almost certainly negatively impact access to justice and will disproportionately impact vulnerable parties and those with limited assets who simply cannot afford to bring claims. 

 

Those who can afford it won’t be inhibited at all as these are only fixed recoverable costs. A party can continue to pay what they want for legal representation.