LSC ‘win-only’ payment scheme on the cards for UK class actions

A radical overhaul of funding arrangements for group action litigation is understood to be under consideration.

Two senior personal injury (PI) and clinical negligence practitioners have told The Lawyer that the Legal Services Commission’s (LSC) head of funding policy Colin Stutt is considering a scheme whereby lawyers will not be paid fees, apart from basic disbursements, unless they win. Stutt declined to comment on the scheme.

The radical proposal, which it is understood has been under consideration for several months but never aired publicly, comes in the wake of the collapse of the MMR group action after the LSC withdrew funding for the claimants.

The claimants – up to 1,000 children whose parents believe them to have been damaged by the MMR vaccine – were advised jointly by Alexander Harris Solicitors, which initiated the action against the makers of three brands of the measles, mumps and rubella jab. Today (16 February) the law firm will launch its three-day judicial review of the LSC’s decision to discontinue funding for its group action. It will be heard behind closed doors in the Administrative Court.

Referring to the LSC’s proposal, a partner, who declined to be identified but has years of experience of group actions, said: “There’s [an LSC] proposal that it will pay nothing to solicitors unless they win a case. They’ll pay for disbursements during the course of the case – the cost of reports and so on – but that’s it. The idea is that we take the risk and the other side pays if they win.”

This could have massive implications for the future of class actions in the fields of clinical negligence, product liability and PI.

It is not altogether clear whether the LSC’s proposal relates to work across the board or specific areas of LSC-funded work. A statement from the LSC issued to The Lawyer said: “The LSC has no plans for a general replacement of legal aid with Conditional Fee Agreements (CFAs).

However, we do want to consult on whether there are specific categories or situations, currently within the scope to legal aid, where CFAs could be encouraged. For example, for clinical negligence cases, we’re interested in exploring a combined approach where public funding would remain for the investigative stage, but CFAs are introduced thereafter.”

A consultation paper on this issue will be published in March this year.

The Alexander Harris lawyers will argue that, under administrative law, the LSC acted unreasonably and irrationally by withdrawing funding for the MMR claimants, many of whom are severely disabled. Lawyers at CMS Cameron McKenna, acting for Invensys, one of the three defendant pharmaceutical companies in the collapsed case, has applied to participate in the hearing.

Lord Dan Brennan QC, a Law Lord and one of the leading product liability barristers of his generation, told an International Bar Association conference several days ago that he thought the days of claims against pharmaceutical companies were dead.