SITTING in his office looking out on a bustling Surrey high street, Colum
Smith readily admitted last week that he is a drain on the public purse.
As a “no-win, no-fee” lawyer, he can charge the National Health Service up to
£750 an hour in successful claims for patient compensation over medical
negligence and errors.
While Smith’s colleagues may toil away on family and criminal cases for legal
aid rates of about £65 an hour, a successful case for him can mean a fees
bonanza out of NHS funds. He can bill the NHS for £375 an hour, with an “uplift”
on a successful case of up to 100%.
Last year he fought a case for a businessman wrongly diagnosed in an accident
and emergency department. Lawyers for the NHS Litigation Authority (NHSLA),
which handles compensation claims for the health service, offered £15,000. Smith
turned them down, demanding £45,000.
The authority refused his counter-offer, sparking a legal battle in which
experts were summoned, detailed statements were drawn up on the claimant’s loss
of earnings and Smith pored over medical files.
The NHS lost the case – paying out £150,000 damages — and was then hit by the
bulging claims for legal costs. Smith’s bill – with costs for legal experts and
an insurance premium against losing the case – came to £300,000. He says the NHS
also spent about £200,000 defending the case.
These bills, of course, ultimately fall on taxpayers, who last year spent
£400m on NHS-related legal claims. The potential liability on outstanding
negligence claims could be as much as £12 billion of which, at prevailing rates,
£6 billion could go on legal fees.
“The waste of money is absolutely phenomenal,” Smith admitted last week. He
says that in about half of cases his legal costs are greater than the damages
paid to the patient: “If you were the NHS, wouldn’t you make me an early offer?”
He admits that once a case is launched, the cost to the public purse rapidly
starts spiralling: “You can’t control the system. If the NHS says to me ‘prove
the case’, I’m going to go away and do it if I can. That’s going to cost a lot
of money if I succeed.”
Smith, a partner in McMillan Williams Solicitors, which has eight branches in
south London and Surrey, says his fees reflect the risk of losing an important
case and that his firm is well known for its willingness to take risky claims.
The NHSLA says the fees for lawyers like Smith are out of hand. It complains
that compensation lawyers are raking in the kind of fees enjoyed by City
commercial lawyers at the height of the credit boom. It accuses the legal
profession of “cherry-picking” cases – and reaping huge rewards for relatively
little risk.
In a submission to Lord Justice Jackson, who is reviewing civil litigation
costs, it argues that no-win, no-fee contracts – known as conditional fee
arrangements (CFAs) – are “indefensibly” expensive.
“We make no suggestion that there is anything illegal or immoral in their
adoption,” it said. “But they are effectively a means of claimant lawyers
virtually doubling their [rates], having cherry-picked their cases.” It says the
top rate available to no-win, no-fee NHS lawyers is £804 an hour.
It is not surprising that the NHSLA is worried. Under its main scheme – the
clinical negligence scheme for trusts – about 50p in every £1 is already being
spent on legal costs. It paid damages of £264m in 2007-8 and legal costs for the
defence team and claimants of about £134m.
According to the authority’s latest figures, the NHS’s potential liabilities
in outstanding clinical negligence claims is nearly £12 billion. Even if only
half these claims are successful, it would mean potential legal fees of up to £3
billion.
NO-WIN, no-fee arrangements were introduced in 1995. They were designed to
improve access to the justice system for claimants who were not entitled to
legal aid – but who also could not afford the often prohibitive costs of a court
case.
The new arrangements were aggressively marketed by “ambulance-chasing” claims
firms with leaflets circulated in hospitals bearing unauthorised NHS logos. New
laws were implemented to regulate the claims companies, but there has been
mounting concern about the bonanza it has produced for lawyers.
Bertie Leigh, a senior partner at Hempsons, which defends the NHS in
litigation cases, describes many of the case files he sees as a “buccaneering
attack on the funds of the NHS”. He said he advises the NHS that it should allow
for the claimants’ costs under no-win, no-fee rules to be as much as four times
higher than those of the defence team.
“I don’t think the principle of a CFA is wrong, but the rates are wrong and
the success fee is too high. The courts have failed to control the costs,” he
said.
He added that no-win, no-fee lawyers were often on hourly base rates approved
by the Courts Service which could be double those of the defence lawyers. Those
fees could then be doubled again if the claim was successful. Under the scheme
the lawyers were paid no fees if they lost cases — the rationale for the
“uplift”. But many lawyers have become experts at picking winners.
Phil Barnes, a clinical negligence lawyer at Anthony Collins Solicitors,
based in the West Midlands, readily admits he picks only the cases he expects to
win. “The trick is you try to get rid of the ones you know are not going to
succeed,” he said. “If I have got 10 cases, I want to make sure I have got 10
cases I am going to win, rather than 20 and win only 10.
“Of course, you are cautious because if you fail, you fail big. Solicitors
are quite good at assessing the good cases and so the NHSLA are paying out more
in costs than they were before.”
In the past three years Barnes says he has taken 11 no-win, no-fee cases
against the NHSLA, winning each one.
“More firms are deciding to take these cases on conditional fee because there
is more reward,” Barnes said. “It’s a risk game. Some get pushed to the wire.
Others get settled very quickly.”
He said a proportion of the success fees went into a pot to fund cases that
might be lost in the future and added that lawyers also decline some claims:
“There’s an awful lot I turn down because the value of the case isn’t sufficient
for a claim to be brought. The costs of bringing the case are likely to be more
than the damages.”
Patients complain that turning away claims which may have smaller damages or
be difficult to prove is an injustice.
Tony Field, 68, who contracted MRSA, the “superbug”, while being treated at
Selly Oak hospital in Birmingham for a broken leg, said he was not accepted by
no-win, no-fee lawyers because although he had a reasonable claim, it was felt
the chances of success were too slim.
Field, who now runs MRSA Support, a patients’ group, said: “It should be been
a straightforward case because I got these raw, open bedsores and I believe that
was because of a lack of proper care. The problem with no-win, no-fee for a lot
of people like me is you don’t get access to justice.”
Field says he was not taken on because he had been cared for in two hospitals
and the lawyers were concerned about trying to prove which hospital was
responsible.
For its part, the NHSLA has tried to curb the cost to the taxpayer. In one
case reported in its 2004-5 annual report, a Liverpool firm billed legal costs
of £4.4m for just one case. After negotiation, the costs were reduced to
£430,000.
Other cases have gone to the courts. The authority appealed successfully
against a claim for £78,000 costs from a legal firm that sued Barking, Havering
and Redbridge Hospitals NHS Trusts. The firm had won just £7,000 for its client.
The Medical Defence Union (MDU), which represents GPs in litigation, said it
had seen cases where the legal costs claimed were 10 times more than the
damages.
Christine Tomkins, deputy chief executive of the MDU, said: “We don’t want to
be defending the indefensible and there are some cases where we are keen to
settle without delay. But these firms come to us with costs incurred, a
conditional fee arrangement in place and insurance premium. It all has to be
paid by us to settle the case.”
In the event that the no-win, no-fee lawyers lose, claimants can be left with
a nasty sting in the tail. If they have not taken out an insurance policy
against meeting the costs of the NHS — premiums start at £2,500 but can rise to
£40,000 – they can face a bill running into tens of thousands of pounds.
Josephine Ocloo, whose daughter Krista died of heart failure in December
1996, pursued a claim against the Royal Brompton hospital in London. The judge
ruled there had been negligence but did not conclude it had caused the death.
Even though Ocloo was on a no-win, no-fee arrangement with her legal team,
she was ordered to pay the defendants’ costs of £120,000. These were cut to
£10,000 after the case was highlighted in a newspaper.
DESPITE the criticisms of no-win, no-fee arrangements, lawyers such as Smith
insists they provide an effective means of funding cases. He said costs could be
cut if the NHSLA acted more quickly to settle cases.
“A lot of these cases would be stopped in their tracks if they put in
reasonable offers earlier,” he said. He strongly denies that he “cherry-picks”
cases, but concedes it is a practice that might be deployed by other firms.
Peter Walsh, of Action against Victims of Medical Accidents, agreed that the
NHSLA could save money with earlier settlements: “Damages are being frittered
away on legal fees and we need a system where cases are settled much more
quickly and effectively.”
The NHSLA says it has to defend cases robustly which it considers are without
merit. It wants more control on the fees paid to no-win, no-fee lawyers.
Personal injury lawyers deny they charge excessive fees. Amanda Stevens,
president of the Association of Personal Injury Lawyers, said claimants’ costs
were scrutinised in detail by the courts. She said the high rates reflected the
risk involved in fighting cases under conditional fee agreements.
New kind of justice
No-win, no-fee deals were introduced in 1995 to open up a justice system that
favoured the poor and the very rich.
When the scheme was expanded to most civil cases three years later, Geoff
Hoon, then a junior minister, said: “The question of whether one gets one’s case
to court will no longer depend on whether one can afford it, but on whether
one’s case is a strong one.”
The 1999 Access to Justice Act allowed judges to make the losing side pay the
extra costs associated with this type of case, triggering a boom.
These so-called “uplift” fees meant solicitors could charge extra to
compensate for the possibility of defeat and therefore no fee.
But the reforms gave rise to claim “farmers”, whose brash TV adverts
suggested any accident victim could successfully sue for compensation,
regardless of the strength of their case.
In 2006, Lord Falconer, then lord chancellor, brought in an act to halt what
he called “a culture of fear of being sued”, blamed for stopping schools
organising trips and councils opening parks.
Worst-hit trusts
Of 242 NHS trusts, 69 paid out more in legal costs than in damages to
patients in 2007-8. The top 15 with the highest legal fees were:
United Bristol Healthcare
Legal fees: £1.65m
Damages: £1.09m
Nottingham University Hospitals
Legal fees: £1.52m
Damages: £1.38m
University College London Hospitals
Legal fees: £1.27m
Damages:
£610,000
Blackpool, Fylde and Wyre Hospitals
Legal fees: £1.2m
Damages:
£657,000
Doncaster and Bassetlaw Hospitals
Legal fees: £1.2m
Damages: £1.16m
Whipps Cross University Hospital (east London)
Legal fees: £1.1m
Damages: £880,000
Salford Royal
Legal fees: £1.03m
Damages: £521,000
Whittington Hospital (north London)
Legal fees: £947,000
Damages:
£717,000
Buckinghamshire Hospitals
Legal fees: £946,000
Damages: £856,000
Royal Liverpool and Broadgreen University Hospitals
Legal fees: £881,000
Damages: £583,000
Aintree Hospitals
Legal fees: £626,000
Damages: £509,000
North Cheshire Hospitals
Legal fees: £607,000
Damages: £488,000
West Middlesex University Hospital
Legal fees: £590,000
Damages:
£545,000
Swindon and Marlborough
Legal fees: £581,000
Damages: £514,000
Walsall Hospitals
Legal fees: £536,000
Damages: £454,000
Source: NHSLA
The issue is not the multi track cases having an adverse effect on our society. It is the fast track and small track claims that are the issue. Fat cat lawyers spending more time rubbing their hands on costs rather than looking after the claimant. If its not worth £1K+ the don't want know.
Mark B, Wirral, UK
The media should be more concerned to find out why there are so many and so costly negligence cases in our hospitals. The training and regulation of staff needs improving considerably and if our hospitals were not so dirty and staff were properly accountable there would be fewer damages claims.
A Tucker, Northampton, England
Every profession that makes money is being bashed by the media, first it was greedy bankers, now its greedy lawyer, who will be next. The point is she was offered £15K by the NHSLA and was awarded £150K by the courts. Ask the client is she was happy the compensation her lawyer got her.
Imran, Maple Ridge, BC, Canada