A system undergoing radical surgery…

Sweeping changes are taking place in personal injury and clinical negligence law, not least with the removal of legal aid from personal injury cases and the Lord Chancellor’s announcement that clinical negligence cases are to be funded from the leftovers of the criminal legal aid budget. And, with PI and clinical negligence becoming increasingly specialised and separate areas of law, it is now essential that both solicitors and barristers can prove their credentials.

In 1996, the Law Society set up a medical negligence panel of accredited solicitors. Firms are currently undergoing procedures to obtain a franchise whereby they can apply for legal aid for clinical negligence claimants.

According to clinical negligence recruitment specialist, Daniel Lewis of Smith & Manchester, the market is tightening all the time. “Firms in this field fall into two categories,” he says. “There are those who have made a commitment to do it and are willing to put money into it, and then there are those who are taking more of a ‘suck it and see’ approach, and those are the firms that are going to come a cropper.”

The rationale behind reducing the number of lawyers able to obtain legal aid for claimants was that many practitioners were not qualified to undertake the work. There are now around 150 firms throughout the country with a contract to carry out clinical negligence work. This represents a huge reduction in the number of firms taking on such cases and it remains to be seen whether the few can cope with the huge increase in the number of cases they are handling. According to one clinical negligence practitioner, some firms are allowing their solicitors to handle more than 200 cases at a time.

Richard Follis of Challinors Lyon Clark says his firm is aiming for a maximum of 50 cases per solicitor. “The key to success is managing caseloads and avoiding our lawyers being swamped.”

The reduction has also led to a huge imbalance in the geographical spread of firms holding a contract, with, for example, a concentration of franchised firms in the South East and a huge dearth in the Welsh border regions.

In tandem with the streamlining of claimant firms, defendant firms are also being severely limited. Perhaps the most important development in the homogenisation of clinical negligence actions was the advent of the National Health Service Litigation Authority (NHSLA).

Until 10 years ago, all cases were handled by the notoriously bullish medical defence unions but, according to David Pittaway of No 1 Serjeants’ Inn, after Health Authority Trusts were introduced, some authorities began to “paddle their own canoes”.

“The NHSLA was set up to deal with the cases being handled by these trusts, and is designed to provide uniformity of response and, in cases where things go sadly wrong, apologies to be given at a much earlier stage,” he says.

Part and parcel of the NHSLA is its streamlining of firms able to carry out defence work in this field. In February this year, the panel was cut to 18 firms, including seven “gatekeeper” firms. These gatekeepers – Trowers & Hamlins, Barlow Lyde & Gilbert, Browne Jacobson, Vizards, Reynolds Porter Chamberlain, Weightmans and Kennedys – are directly answerable to the NHSLA, and are responsible for overseeing the conduct of cases.

For the most part, lawyers seem quite happy with the new arrangement, despite its overlay of an extra tier of lawyers. Clark Chessis, senior clerk at Pittaway’s set recalls a large cervical smear litigation in Canterbury last year where Brachers was the instructing firm and Trowers & Hamlins was the gatekeeper firm. “It was a good experience because you have the certainty of specialists dealing with the case, and time was used cost effectively,” he says.

According to Pittaway, the present system is working very well. “There’s a much greater degree of input from the NHSLA, either directly or through gatekeepers,” he says.

Augustus Ullstein QC of 29 Bedford Row is not quite so confident. “The longer a decision takes, the less chance we have of settling the claim and if you have to go through these gates, by the time they come back with an answer, your negotiating position may have changed.” He adds that if the solicitors leading the case are not capable of making decisions for themselves, “what are they doing there in the first place?”

So, what is the effect of all this streamlining on the personal injury and clinical negligence bar? As with solicitors’ firms, work is being increasingly concentrated in the specialist sets. This is clearly good news for those sets, but as with solicitors, the question is whether they can handle the increased workload competently and quickly enough to avoid the courts being clogged up.

There has been a suggestion that the NHSLA wants, in a cost-cutting drive, to remove barristers from the equation altogether. However, the Bar is fighting back against any reduction in work by introducing Bar Direct – a direct access scheme for all qualifying companies and public bodies, due to be piloted in the autumn. A Bar spokesman claims that the NHSLA and local authorities would be ideal candidates to obtain the necessary licence to instruct the Bar directly.

However, Paul McNeil, head of Field Fisher Waterhouse’s clinical negligence practice – all of which is on the claimant side – says: “The NHSLA wants to use barristers sparingly and only when absolutely necessary,” says McNeil. “I’d be very surprised if [Bar Direct] takes off in respect of clinical negligence cases,” he continues, “it’s very difficult for barristers to organise themselves, even when solicitors are running the cases, because of the amount of documentation you need to get hold of.” This includes writing numerous letters to hospitals and GPs in order to obtain relevant medical records. “The Bar is not used to doing that,” McNeil says.

McNeil sees the Woolf reforms as fundamental to the changes currently under way. “There’s a big change in culture being brought about. I’ve noticed over the past few months that the NHSLA is taking a far more pragmatic and sensible view on cases,” he says.

Revealing that claimant lawyers are having “quite an easy time” of it while the NHSLA sorts itself out, he warns: “They’re going to toughen up. They’re going to fight the cases that are winnable and settle those that are not.”

Settling early is at the heart of a set of new proposals under Woolf. A major component of the new system is a series of pre-action protocols that lawyers are now supposed to go through even before issuing proceedings. These include the claimant writing a detailed letter of complaint to the other side, which must reply in turn. Although these protocols are not mandatory it is, according to Ullstein, “a good idea” to adhere to them, particularly when it comes to the first case management hearing. “If you don’t follow the protocols there can be cost implications,” he says.

These protocols are only pre-action however, and lawyers are awaiting news of something to replace the now defunct Practice Direction 49, which set out procedure during litigation. Follis of Challinors Lyon & Clark says: “There is an urgent need for a practice direction to avoid inappropriate orders being imposed by case management judges and to give guidance to both judges and solicitors on how to work to the same rules.”

Conditional fee agreements (CFAs) have also proved a real bugbear in clinical negligence cases so far. But with last year’s Wells v Wells decision – which significantly increased the amount of potential damages awardable for future care – alongside the impending Access to Justice Bill’s inclusion of insurance premiums and success fees as awardable costs, CFAs may become more popular.

One of the most pressing complaints about CFAs in clinical negligence cases is the serious frontloading of costs, whereby around £5,000 can be spent investigating a claim even before deciding whether to issue proceedings. Ullstein concludes: “If the client hasn’t got that money, the insurers won’t cover it either.” He is not convinced the solicitor will be any more prepared to bear the cost.

The Lord Chancellor takes a rather different view. The conditional fees consultation paper states: “It could be argued that experience in this field of litigation ought by now to be sufficient that a solicitor who relied on these cases for his income should be experienced enough in structuring his business to absorb the costs of losing cases, within the overall charging structures he has in place.” The paper goes on to say that legal aid has, over the years, simply cushioned lawyers from the “economic realities” of practising in this area.

Other concerns include the eventuality of clients having sudden changes of heart and insurers going bankrupt, or “off-risk”, withdrawing cover if they do not like the claimant’s reasons for refusing a settlement. Indeed John Kitchingman, head of Pannone & Partners’ clinical negligence practice in Manchester, thinks insurance premiums are currently very high. “But hopefully with more products coming onto the market, competitive pressure will drive prices down, but there’s no real sign of that at the moment,” he says.

On a global level, CFAs could be weighted in favour of defendants with massive financial muscle. But with only a minority of cases being privately funded, the complete withdrawal of legal aid might make the financial situation rather more clear to defendants and prejudice the claimant’s case. “I don’t think there’s anything that will replace legal aid when it comes to access to justice,” says Kitchingman.

“If they abolish legal aid there’s no doubt that there will be a massive gap.”