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Fixed costs for lower value clinical negligence claims

Fixed costs for lower value clinical negligence claims

Fixed recoverable costs for clinical negligence claims that settle pre-issue for up to £25,000 will come into force next April, the government announced today.

Legal Futures

It has, however, responded to complaints from claimant lawyers about the proposed level of costs and increased what was on offer.

The Department for Health and Social Care (DHSC) said the new process “should facilitate quicker resolution so harmed people get compensation more quickly, make legal costs more proportionate and predictable, and make an important contribution to controlling rising clinical negligence costs for the NHS”.

It estimated that the reforms would save NHS hospitals £1bn and other healthcare providers in the public and private sector £1.3bn.

The changes apply only to pre-issue cases worth between £1,501 and £25,000; where claims go on to litigate, they will then be caught by the separate fixed costs regime being introduced next month.

If a claim is overvalued but subsequently settles within this range, the fixed costs will apply regardless. “It will therefore not be advantageous for claimants to unreasonably overvalue a claim at the outset,” the DHSC said.

The consultation, published in January 2022, was based on the blueprint drafted by a Civil Justice Council (CJC) working party in 2019. Members could not agree on the figures for the fixed costs and the DHSC chosen the figures put forward by the defendant representatives, rather than the claimant representatives.

There were 98 responses, with claimant lawyers generally against the reforms and defendants in favour.

The consultation outcome document said claimant solicitors provided no data to back up their assertions that many would find it unprofitable to work on these claims and that this could restrict claimants’ access to justice.

It said: “We do know that FRC schemes for civil claims based on damages bands already operate well in other areas of civil law, including in personal injury claims.

“While we acknowledge that clinical negligence claims can be more complex than other areas of civil law, the aim of Sir Rupert Jackson’s recommendation, the CJC working group and subsequent development of the proposals was to take into account this known complexity and ensure that the process and costs framework were appropriate to this specific claim group.”

Nonetheless, the DHSC said it took note “of the strength of feeling” and agreed to increase the costs levels to halfway between the two groups on the CJC working party.

This means the total fee for standard track work will be £7,000 plus 30% of damages, rather than £6,000 plus 20% of damages.

For light-track claims – where liability and causation is admitted – the fee for all stages will be £3,250 plus 20.5% of damages, compared to the original £2,000 plus 10% of damages.

The additional bolt-on fee for protected parties has increased from £650 to £1,800.

The DHSC said: “We believe this significant increase to costs at all stages will mitigate risks to access to justice across all claims in the scheme and better takes into account the claimant perspective in the CJC working group, representing a fair position on claimant costs.”

There will be a 12.5% London uplift, where the claimant is based in London and uses a lawyer in the capital.

“The proposals could make small legal firms less able to compete with larger firms that have greater economies of scale and can provide services ‘en-masse’ more cheaply,” the DHSC acknowledged. “Firms with small, specialised departments are therefore likely to be disproportionately impacted…

“We also acknowledge concerns that the proposals may result in changes to the way the clinical negligence legal market organises itself and manages claims.

“However, the proposals are intended to prompt cultural and behavioural shifts in how lower damages clinical negligence claims are handled, and we remain convinced there is a good economic case for making the proposed changes.”

The standard track will begin pre-issue with a letter of claim detailing all the evidence, accompanied by an offer to settle.

The defendant will have to send a letter of response outlining their case and responding to the offer within six months, to which the claimant will have a right to reply. There will be sequential exchange of experts’ reports and witness statements.

If unsettled, there will then be a mandatory ‘stocktake’ enabling the parties to examine the strength of each other’s position and work towards settlement, with mandatory but non-binding neutral evaluation – carried out by a lawyer from an approved list – if the case has still not settled.

The parties will not have to accept the outcome of this, but there will be costs consequences for a party that presses ahead to trial and failed to better the evaluation.

The light track will involve a similar but quicker process where liability is admitted within eight weeks.

The scheme will not apply where: more than three experts are needed (the consultation had proposed two); the claim is made against multiple defendants where the allegations of negligence against each defendant are materially different; the claim arises from a still birth or neonatal death, including claims made by secondary victims; and where limitation is raised by the defendant as an issue.

The process will be aided by template claim letters and model elements for expert reports, with costs consequences for not complying with the process, such as not providing sufficiently detailed evidence at the outset of the process.

The proposals will now go to the Civil Procedure Rule Committee. The scheme will apply to claims where the date of notification falls on or after the date the new rules come into force next April.

The DHSC will also conduct a further consultation focusing on the specific issue of how to deal with disbursements in the new scheme.

There will be a post-implementation review within three years.

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