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When legal fees outweigh damages

November 9th, 2015

Proper budgeting would be a better solution than more fixed fees for claimants.

The recent case of Hobbs v Guy's and St Thomas' NHS Trust was a gift to the government - not to mention to the NHS Litigation Authority.

In a case that settled for £3,500 in damages, costs were claimed of £32,329 - which were slashed by two-thirds by Master O'Hare.

When costs outweigh damages in this way, you can expect this to be held up as an example of why claimant lawyers' fees should be fixed in lower-value clinical negligence cases - something that is currently being looked at by a government keen to reduce its spend on claimant legal fees.

In Hobbs, the judge felt work had been done by an overqualified fee-earner, and he disallowed costs relating to a consultant anaesthetist, and relating to the claimant's initial offer to settle.

The difficulty, of course, is that judges are looking backwards at costs, knowing full well what the case actually settled for in the end. But the lawyer running the case does not have that luxury.

That's where budgeting comes in. With budgets, a judge can say what they believe to be appropriate costs at the outset of the case, when no one knows what the final outcome will be - including the judge. The lawyer can then cut their cloth accordingly in the way they manage the case.

So far, budgeting has caused mayhem in clinical negligence, putting massive pressure on judicial resources and generating huge backlogs - to the point where a temporary respite from budgeting has been introduced for some clin neg cases.

But surely if budgeting is done properly - with the courts given enough resources for judges to be able to give proper attention to budgets without causing backlogs - then this would be a far better, and fairer, way of controlling clinical negligence costs, than introducing fixed costs.

For one thing, budgeting acts to control what both sides spend on litigation; whereas if fixed costs do come in, what's the betting that they will only be imposed on the claimant side of the divide?

Rachel Rothwell, editor of Litigation Funding magazine

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