Legal Aid, Sentencing and Punishment of Offenders Bill

Memorandum submitted by the Medical Protection Society (MPS) (LA 63)

INTRODUCTION

1. The Medical Protection Society (MPS) is the leading provider of comprehensive professional indemnity and expert advice to more than 270,000 doctors, dentists and other health professionals around the world. We have nearly 120 years experience of the medicolegal environment and operate in over 40 countries around the world. In the United Kingdom around 170,000 doctors, dentists and other healthcare professionals are members representing around 50% of all doctors and 70% of all dentists.

2. As a mutual, not-for-profit organisation we offer members help, on a discretionary basis, with legal and ethical problems that arise from their professional practice. This includes clinical negligence claims, disciplinary and professional regulatory investigations, inquests, complaints and general ethical and professional advice. In England and Wales, MPS handles around 5,000 clinical negligence claims and potential claims at any one time.

3. We firmly believe that every patient who has been harmed as a result of negligent treatment is entitled to an explanation, apology and fair and timely compensation. We always seek to establish the facts, assess the merits of a claim and provide a prompt and comprehensive response to claimants. Where we believe compensation is due our approach is to ensure that we provide fair compensation as soon as possible; where we believe no negligence has occurred we will provide a full explanation which allows the claimant to understand our reasoning. We will also explore alternative dispute resolution wherever possible and appropriate.

4. The way in which clinical negligence claims are handled differs across primary and secondary healthcare. In the NHS hospital sector, the NHS Litigation Authority and the Welsh Risk Pool provides an indemnity through a mutual pooled scheme for the cost of clinical negligence claims brought against NHS Trusts and Health Authorities in England and Wales. Claims are brought against NHS Trusts and Health Authorities instead of individual doctors. In primary care, MPS and other Medical Defence Organisations ("MDOs") provide an indemnity against the cost of clinical negligence claims brought against independent contractors such as GPs and dentists. MDOs also manage all clinical negligence claims against private consultants. Claims will be brought against the individual healthcare professional and the legal representation will be provided by MPS from our medical and dento legal advisers and in-house or panel lawyers. Any compensation awarded to the claimant along with their legal costs will usually be funded by the practitioner’s MDO.

5. MPS welcomes the opportunity to comment on the Legal Aid, Sentencing and Punishment of Offenders Bill. Our submission focuses on Part 1 of the Bill regarding legal aid and Part 2 regarding litigation funding and costs.

Part 1: LEGAL AID

Legal Aid

6. We agree in principle with the proposal to exclude clinical negligence cases from legal aid funding since there is no reason why funding by conditional fee arrangements (CFAs) should not be available for most meritorious clinical negligence claims.

7. However we have some concern that the costs incurred in the early investigation of complex claims may be beyond the means of some claimants. We have in mind particularly the costs involved with the early investigation of cases involving profoundly disabled babies, where a raft of expert evidence is required to establish a claim. We believe that limited legal aid should be available in such cases to fund preliminary investigations and that, once it becomes clear that the claim has merit, the claimant could then move to a CFA, with the Legal Aid Fund having a charge over any damages and costs recovered to meet the earlier costs.

PART 2: LITIGATION FUNDING AND COSTS

8. MPS has long held deep concerns about the way in which costs are managed in clinical negligence cases and we have been urging the government to implement the fundamental changes proposed by Lord Justice Jackson. Our experience shows that the costs associated with claims in England and Wales are among the most expensive in the world. It is clear that these legal costs in clinical negligence cases have become disproportionate and unsustainable.

Clause 41: Conditional fee arrangements

9. We warmly welcome the proposal in clause 41 of the Bill to abolish the recoverability of success fees, commonly charged by lawyers acting under Conditional Fee Arrangement ("CFA"). We believe that CFAs are a primary driver in escalating legal costs, giving claimant lawyers an unhealthy stake in prolonging a claim.

Clause 43: Recovery of insurance premiums by way of costs

10. We are disappointed that Lord Justice Jackson’s recommendation to ban the the recoverability of after the event (ATE) insurance premiums in all circumstances has not been followed. However we can understand the arguments in favour of having some limited recovery in the absence of legal aid provision.

11. ATE insurance is often taken out by claimants too early during the outset of the pre-action phase before the claimant faces any risk of having to pay the defendant’s costs and when a prospective defendant may not even be aware of the potential claim. This means that a defendant who wishes to settle a claim at an early stage will have to fund the unnecessary premiums paid by the claimant. In these circumstances, we would not consider the recoverability of insurance premiums to be appropriate.

12. If the recoverability of insurance premiums is to be limited to the cost of expert reports in clinical negligence cases, as stated in clause 43, section 58C(1) and (2), we would like to see some control over the number of experts instructed. Defendants should only be liable to pay for that part of the premium where reports are actually relied upon. This would emulate the current situation.

13. We urge the regulations to prescribe a maximum amount for the recoverability of ATE insurance as inferred in clause 43, section 58C(4)(a). This would prevent excessive cost building and the inappropriate or excessive use of experts.

14. In order to reflect the impact of the availability and cost of ATE premiums following the reforms, we also recommend a regular review of the maximum amount to be recovered. It is difficult to comment now on what the financial maximum or mechanism for determining the proportion to be recovered should be, as we do not know how the insurance industry might respond to the need for this type of product.

Clause 51: Payment of additional amount to successful claimant

15. We note the proposal to allow payment of an additional amount not exceeding a prescribed percentage of the amount awarded to the claimant by the court. We consider that there should be a prescribed scale of increases linked to the value of the award to avoid disproportionate additional awards. We recognise that this proposal reflects the recommendations of Lord Justice Jackson and will incentivise defendants to make early and realistic offers to settle meritorious claims.

September 2011

Prepared 7th September 2011