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Many people do not know that the Government is quietly planning on introducing fixed costs for many types of clinical negligence cases.

What this means is that instead of all of a successful claimant’s legal costs being paid by the negligent treatment provider (which is the way our laws have always operated), so-called “fixed costs” mean that the negligent party would only have to pay a fixed contribution to the claimant’s legal expenses.

The Gov.uk website puts it as follows:

The proposals would only affect the amount of legal costs that claimant lawyers can recover following a successful claim, not the compensation that a claimant could receive.

Sounds great doesn’t it? Injured patients are unaffected but those greedy lawyers have to make do with smaller fees – surely a win-win?

Well, not so fast. There is something the Government isn’t telling you, and when properly understood, it reveals that this sentence is not just misleading – it’s entirely false.

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The way legal costs actually work is that the lawyer does the work and the client is liable for the bill at the end.  If the client wins then, traditionally, the losing defendant has to pay their bill; if they lose then they are liable for fees (though in no-win-no-fee cases the bill is cancelled).  Therefore, if the bill is £20,000 then that £20,000 is sought from the losing defendant, and the client’s compensation is separate.

What happens though when “fixed costs” are introduced at say £5,000, for cases that typically involve £20,000 of work?  Does it just mean greedy lawyers have to make do with a smaller swimming pool that year?  Well, no, as with any other business, the cost of the services provided are determined by economics – the fees charged reflect the cost of running the case to the law firm.

Therefore, if £20,000 of work is required on a case, and the client is only able to recover £5,000 from the opponent then there is a £15,000 gap.  Either this gap will have to be paid by the client, generally from their compensation, or the law firm will not be able to take on the case.  This is already happening in practice with other personal injury cases for which there are fixed costs in that given those fixed costs introduced in 2012 were very low at the point of introduction, and have never been increased in line with inflation since, many law firms are already having to take large deductions from compensation in order to ensure it remains commercially viable to take on these “fixed costs” cases.

Imagine this scenario:

Say the Government introduced fixed costs for building works – no matter how much work was required, the builder could only charge say £3,000.  What is likely to happen?  Would builders shoulder the loss and begin doing £30,000 jobs for £3,000, or will they stop doing the work?

This is where the Government is playing sleight of hand (to put it mildly) in trying to give the public the impression there is a separation between client and lawyer.  There is no such separation – the client is liable for the lawyer’s fees and so if they can only recover a small part of those fees from the defendant then there is going to be a big problem and whether it results in law firms no longer taking on cases, or large deductions from compensation, the only losers are, as ever, injured patients.

The Government would have been advised by its own lawyers and so, unless they do not understand these general principles of costs law and economics (which, if we are to trust them to run the Country, we must hope is not the case), it must be assumed they intentionally seek to mislead the public on this issue.

The only real solution to all medical negligence issues is, and has always been: crack down on the negligence itself because if the negligence stops, so does the compensation, and the legal costs, plus patients and families go unharmed, though the Government is yet to show any real interest in pursuing this route.

By James Winterbottom, Solicitor

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