New hourly rates for experts in clinical negligence legal aid cases

Practitioners should wake up to little-noticed changes in the remuneration of experts in clinical negligence legal aid cases, which came into force on 3 October 2011. These are illogical and unworkable and are likely to cause major problems ahead of the proposed abolition of legal aid for most cases from April 2013.

Attention has rightly focussed on the Legal Aid, Sentencing and Punishment of Offenders Bill currently being considered by the House of Lords. The withdrawal of legal aid for clinical negligence is now so controversial that even Lord Tebbitt opposes this. However, this has diverted scrutiny from an important change which has already taken effect and which poses an immediate problem.

The position before 3 October 2011
Before 3 October 2011, lawyers were subject to prescribed hourly rates for legally aided clinical negligence cases, but experts were not. The prescribed rates for lawyers were low. After the initial stages of a case, the rates were £70 per hour for a solicitor and £90 for a QC. However, these rates only applied if the case was unsuccessful and a claim was made against the legal aid fund. If the claim was successful, lawyers’ fees could be recovered from the defendant at normal market rates. Consequently, solicitors and barristers were willing to take on legally aided clinical negligence cases if they were confident in their judgement that the case was likely to succeed.

Clinical negligence cases are handled by the Legal Services Commission’s Special Cases Unit (SCU). In about 2006, the SCU introduced guideline rates for many expert disciplines, specifically those involved in cerebral palsy claims. These rates were used when approving “case plans” setting limits on legal aid expenditure. The rates were also used when determining whether the Legal Services Commission would reimburse the solicitor for the full expert’s fee in an unsuccessful case. If the expert’s invoice showed a higher hourly rate, the fee would be recalculated using the guideline rate and the solicitor would be out of pocket for the difference.

In practice, this scheme did not cause problems for two reasons. The first is that the guideline rates were not particularly unreasonable (£180 per hour for obstetricians, £200 for paediatric neurologists, etc). The second was that there was no doubt that higher expert rates could be recovered from defendants in successful cases, as long as they did not exceed the true market rate for the expert discipline concerned.

The Legal Services Commission was willing to make payments on account of experts’ fees for the full amount charged by the expert, even if the actual hourly rate was higher than the guideline. Any excess payments on account would be recouped from the solicitors at the end of the case.

Ministry of Justice consultation and response
In November 2010, the coalition government issued a consultation on proposals to “reform” (cut) legal aid.The closing date for the consultation was in February 2011 and the government eventually published its response in June.

The consultation proposed that the fees paid to lawyers by the Legal Services Commission be reduced by 10%. This was not a surprise or a major cause of concern for clinical negligence practitioners, for whom legal aid was already only profitable when market rates could be recovered from the defendant in successful cases.

The consultation paper also proposed “that the benchmark hourly rates currently applied by the LSC when considering whether experts’ charges are reasonable, should be codified and subject to a 10% reduction” (consistent with the approach adopted to lawyers’ fees).

Most clinical negligence practitioners were too alarmed by the proposal to abolish legal aid for clinical negligence claims to worry too much about this part of the consultation. We assumed that the “benchmark hourly rates” referred to were those applied by the SCU. We should perhaps have been alerted by the reference to those rates being lower in London than outside London, because the rates used by the SCU were nationwide. There was also a reference to the new rates “binding the court to prevent expert costs from increasing at the assessment stage”, which certainly should have rung alarm bells, but which was overlooked in the general panic about the proposal to withdraw legal aid altogether for those injured through clinical negligence.

In the response paper, the government said that it would proceed with the proposal to cut the benchmark rates by 10% and would shortly issue a Funding Order to this effect. Nothing more was said about the suggestion that these rates would bind the court.

The new position
The Community Legal Service (Funding) (Amendment No 2) Order 2011 came into force on 3 October 2011. The new codified rates for experts are set out in Schedule 2. This contains some surprises. For example, the rate for an A&E consultant is £126 per hour outside London and £135 per hour in London. However, the rate for a neurologist is £153 per hour outside London and £90 per hour in London! Similarly, neurosurgeons, neuropsychiatrists and paediatricians are to be paid £171, £158 and £135 respectively outside London, but experts in all 3 disciplines based in London are to be paid only £90 per hour. Clearly many medical experts currently based in London would be well advised to move to cheaper premises outside the city at the earliest opportunity, so as to be able to charge a significantly higher rate for legal aid work.

This runs contrary to the accepted wisdom that services are more expensive in the capital because of increased overheads and the higher cost of living. During the consultation process, the government claimed that London rates were lower because of a surplus of experts. However, practitioners will be aware that the streets of the capital are not overcrowded with neurologists, neuropsychiatrists and neurosurgeons wanting to do legal work for £90 per hour.

It will also be noted that the codified hourly rates are much more than 10% lower than the rates previously used by the SCU in clinical negligence cases. For example, the hourly rate for an obstetrician has fallen from £180 to £135 per hour. For a paediatric neurologist practising in London, the reduction is from £200 to £90 per hour. The Legal Services Commission has failed to come up with an explanation for this.

The Legal Services Commission has said that it will not make any payment on account of experts’ fees to solicitors where the hourly rate on the invoice exceeds the new codified rate. In other words, if a solicitor pays an expert the market rate in the hope of being able to recover this from the defendant if the case is successful, the Legal Services Commission will not even make a payment on account for the sum which the expert would have charged if they were using the codified rate. Instead, the solicitor must bear all of the cost of the expert’s fee. Moreover, it is no longer clear whether the court can in fact order the defendant to pay the expert’s fee at the market rate if the case was funded by legal aid.

Even if it is possible to recover experts’ fees at market rates from defendants in successful cases, solicitors will still have to write-off the difference between market rates and legal aid rates for experts in unsuccessful cases, in addition to making a loss on their own fees. Unlike with lawyers, it is not possible for the rate actually paid to the expert to vary according to whether or not the case was successful, because experts must be impartial and cannot have a financial stake in the outcome of a case. All of this means that solicitors may not want to pay experts more than the codified rates in cases which are funded by legal aid.

The regulations do allow the Legal Services Commission to authorise higher hourly rates in “exceptional circumstances”. There are 2 types of exceptional circumstance, defined as follows:-

1. “Where the complexity of the material is such that an expert with a high level of seniority is required”. However, the codified rates are for consultants, not for junior doctors. Moreover, all clinical negligence cases are complex and require expert witnesses with a high level of seniority and it is not at all clear in what circumstances this would be considered “exceptional”.
2. The other possible exceptional circumstance is “where the material is of such specialised and unusual nature that only very few experts are available to provide the necessary evidence”. Again, it would be hard to argue that this applies to most clinical negligence cases, even where the issues are very complex and the sums involved are very substantial.

The Legal Services Commission apparently believes that the market will adjust and that experts will accept the codified rates in order to obtain the work. It is possible that some experts will undertake work at these rates, but take much longer to complete it (thereby ensuring that their overall fee remains the same). However, the concern is that many good experts will simply be unwilling to accept instructions in legal aid clinical negligence cases if they are going to be paid at these rates. They do have alternatives. They may give up medico-legal work altogether and treat more private patients. Alternatively, they may only accept medico-legal instructions where the claimant is not legally aided or where those instructions come from the defendant. It is a certainty that the NHS Litigation Authority and the medical defence organisations will not be paying these rates to their experts.

It would be ironic if legally aided claimants were left having to instruct junior experts who are willing to accept these rates and this resulted in a higher proportion of such claims being unsuccessful because the defendant’s expert is more senior and carries greater authority. This would mean that the reduction in experts’ hourly rates for legal aid cases resulted in greater expense to the legal aid fund, because more cases are lost and the cost paid from the fund, rather than being recovered from the unsuccessful defendant.

A further irony is that if legal aid for clinical negligence becomes unworkable because of the hourly rates paid to experts, then many solicitors will advise their clients to fund their cases by way of conditional fee agreements. In most cases, this means substantial additional cost to the defendants (usually the NHS) in the form of liability for success fees and insurance premiums. Therefore, the cut in experts’ hourly rates in legal aid cases may lead to substantially increased expense to another public fund. This is not joined up government.

It seems likely that the best solution will be for practitioners to persuade the Special Cases Unit to take a generous view of what amounts to “exceptional circumstances” in clinical negligence claims, so that authority is given to exceed the codified rates in the majority of cases. If this is combined with confirmation that the courts may require defendants (not the Legal Services Commission) to pay higher rates in successful cases, then it may be possible to save the situation. Otherwise, it is likely that this illogical and ill thought out measure is only going to result in more cases being brought under conditional fee agreements and a fall in the success rate for those cases where legal aid is still used, both of which will result in greater expense to the public purse.

*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*