The Sunday Times followed on from last week's attack on the costs paid out in clinical negligence cases (see previous blog) with a Top 10 list of the firms who were paid the most by the NHSLA in 2007/08:
Irwin Mitchell £10.75m
Leigh Day £4.87m
Pannone LLP £4.83m
McMillan Williams £3.01m
Kingsley Napley £2.96m
Gadsby Wicks £2.40m
Russell Cooke £1.86m
Challinors Lyon Clark £1.58m
Keeble Hawson £1.55m
Withy King £1.53m
The list was presumably meant to be a Hall of Shame but one suspects that there will be a number of firms looking at the list and their one regret will be that that they were not higher up the list.
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One article was headed "Lawyers use NHS as £100m cash cow" and another "Lawyers get m0re than victims in NHS compensation scandal". The leading article ran with the headline "Taking a knife to the NHS leeches". The source of this fury seems to have been The NHSLA submission to civil litigation costs review.
The NHSLA paper states that "the whole costs structure is indefensibly expensive in relation to the compensation awarded or agreed". It highlights the large discrepancies between the amounts charged by defendant and claimant lawyers in clinical negligence cases and claims that "claimant legal costs are more than double the defendant legal costs on average and that the gap ... has been widening over recent years".
The impact of CFAs is particularly criticised, with it being claimed that "they are effectively a means of claimant lawyers virtually doubling their profit costs having cherry-picked their cases". It also claims that the effect of CFAs is to produce hourly rates of potentially over £800 an hour.
The papers makes a number of proposals for reform including the introduction of routine costs capping orders and fixed staged success fees.
The NHSLA's submission paper is for the benefit of Lord Justice Jacson's ongoing review of the current costs system. It appears that it is now being generally accepted that he really has neither ruled anything in nor ruled anything out. We can now start to expect a growing number of similar submissions from various interested parties trying to influence his thinking.
The Sunday Times leading article concluded: "The NHS Litigation Authority is right. We need to reform this process and end the party for lawyers." It is fair to say that the Sunday Times is not an entirely uninterested party. The Ministry of Justice is currently engaged in the Controlling costs in defamation proceedings consultation. The press has been attempting to limit CFA funded costs in such claims and a general attack on claimant lawyers' fees will do no harm to that cause.
It might be thought that the Jackson review is coming rather late in the day. Given the damp squib that, so far as costs proposals went, emerged from the Ministry of Justice's Response on the new claims process it seemed that the current government had no real appetite for a major shake-up of the current costs system. However, the Sunday Times quoted Mark Simmonds, the shadow health minister as saying: "It is unacceptable in some cases that the legal fees are many times higher than the awarded damages". With there being every chance of a new government next year, anything now looks possible.
Just as costs draftsmen and other costs professionals were beginning to think there might be some stability emerging, it now looks as if we are in for another period of uncertainty.
In a previous post I commented on the fact that Cook on Costs 2009 is wrong when it says: "With the removal of the [CFA] Regulations  from 1 November 2005 a CFA needs only to be in writing and signed...".
As confirmed by Senior Costs Judge Master Hurst, in Findley v Jones and MIB  EWHC 90130 (Costs): "As things stand at the moment there is no need for a CFA to be signed by the client. As at 4 May 2004 the CFA Regulations 2000 did require such a signature". The same view was expressed in Birmingham City Council v Forde  EWHC 12 (QB).
The requirement for a CFA to be signed by the client and the legal representative disappeared with the revocation of the Regulations. However, what is the consequence if a pre-November 2005 was not signed? It will obviously be a breach of the Regulations but is it a material breach such as to render the agreement unenforceable?
In Fenton v Holmes  EWHC 2476 (Ch) the Court was faced with a CFA document which had been signed by both the solicitor and client. However, the CFA lacked a crucial clause necessary to comply with the Regulations. This clause was contained within a seperate letter sent to the client. This letter was not signed by the client. Mann J found this to be a material breach and the CFA was found to be invalid.
In Preece v Caerphilly CBC (Cardiff CC, 15/8/07, unreported) (Lawtel Link) the CFA had been signed by the client but not by the solicitors. Hickinbottom J held: "I do not suggest for one moment that the solicitor’s signature in this case was omitted for anything other than the most innocent of reasons: but, if a CFA is not signed, then a less scrupulous solicitor may for example seek to enforce his right to be paid his reasonable costs if the client’s claim fails. The signature of the solicitor affords the client some real protection against that possibility, as rare as that hopefully might be in practice". The CFA was held to be invalid.
However, in Findley, Master Hurst decided that the failure of a Litigation Friend to re-sign a CFA previously signed by the Claimant was not a material breach. The facts of this case are so unusual that it is unlikely that much comfort can be taken from this judgment by others who find their CFAs not properly signed.
As a general rule, a CFA entered into before November 2005 that is not signed by the client and the legal representative is likely to be held invalid.
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Many years ago, when I was studying for my law degree, I was told never to simply rely on the headnote of a law report, but to read the judgment in full. This was for two reasons. Firstly, it was often only by reading the full judgment would one properly understand the decision and the reasoning behind it. Secondly, and perhaps more importantly, the headnote was sometimes inaccurate and misleading. Of course, at the time, I ignored that advice.
The modern equivalent to that advice is never trust case summaries you have simply read on the internet (this blog included) but to actually read the full judgment yourself.
A perfect example of the problems that arise from not following this advice is the strange case of Cole v News Group Newspapers Ltd (18/10/06, SCCO, unreported). I say "strange" because of the way this case has been reported. The background to the judgment was a libel claim brought by a certain well known footballer. I don't need to repeat the salacious details of the original story, but I'm sure Ashley would be intrigued to discover this case has become best known in certain circles as a legal costs law authority rather than for the original allegations.
A quick Google search for "Cole v News Group" produces a number of legal websites offering case summaries of this judgment. They all appear to be inaccurate. I say "appear" because the difficulty with this case is it truly does seem to be unreported and is not available on any of the normal resources such as Bailli or Lawtel. This seems to have encouraged a number of individuals to pass on details of this case on a Chinese whispers basis without actually obtaining and reading a copy. Further, a growing number of claimant costs draftsmen routinely quote this case to resist requests for disclosure of CFAs. It may be that the transcript of the case that I have seen is not the final decision and that a further decision exists. If that is the case, and any reader can produce a more recent decision, I will happily write a further post on the subject.
Of the various case summaries that do exist on the internet, three of them refer to this being a decision of Master Haworth in the SCCO. Two of those give the date of the judgment as being February 2007. The third states it is a decision of the Court of Appeal in February 2007. All the summaries seem to suggest that the Court (whichever Court it was) held that a court would not order disclosure of a CFA unless the paying party had first raised a "genuine issue". I don't propose in this post to address what the law actually is on that point.
So what did the judgment actually say? I believe the summary in Cook on Costs 2009 provides a true account of the decision (if not the law): "With the removal of the [CFA] Regulations from 1 November 2005 a CFA needs only to be in writing and signed but that did not stop an application for disclosure in Ashely Cole v News Group (2006) Oct 18 SCCO. That application failed simply because no points of dispute had been served hence CPR 47.14 and CPD 40.14 did not apply. No decision was made as to the applicability of Hollins to post 1 November 2005".
The transcript I have is dated 18 October 2006 (the same as the one quoted in Cook on Costs) and I am therefore proceeding on the basis that it is indeed the only judgment made in this case on that point. Cook on Costs' summary is accurate. The application was dismissed simply on the basis that it was premature. There is absolutely no mention of "genuine issue" in the judgment, let alone any finding on this point. Indeed, the judgment concludes that when the matter comes back to the Court for the detailed assessment hearing "it may very well be that at that stage a disclosure of the CFA is appropriate".
So my advice, particularly to any claimant law costs draftsmen reading this blog, is obtain and read the actual judgment in this case before seeking to rely on a decision that does not actually support your position.
I'll come back to why Cook on Costs was wrong on the law on another day.