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Published On: March 17, 2020 | Blog | 0 comments

When can a Deputy recover legal costs from P’s estate, which have been incurred in legal proceedings?


The Court of Protection has issued some interesting guidance on costs recovery from P’s estate,where a Deputy has engaged or instructed a 3rd party, in-house, to engage in litigation on P’s behalf.

Historically, it has been widely accepted industry practice for a Deputy to consider instructing specialist in-house solicitors (where such expertise exists) to provide advice in litigious matters on P’sbehalf.

This might include reviews of P’s educational needs (including the involvement of a Tribunal), acting as litigation friend in proceedings (for example, in a claim for Personal Injury damages award) or indeed any other litigation that might be encountered on P’s behalf and for their benefit.

It has long been deemed to be best practice to ensure that prior to instructing any in-house solicitor to provide advice on matters that are likely to become contentious, that three quotes are obtained setting out the anticipated fees for that work. That includes an in-house quote and two additional, independent quotes, from reputable firms specialising in the provision of services for which their input is required.

Deputies are bound to act in accordance with the obligations set out in the Mental Capacity Act 2005, and the Code of Practice to the Act; it being well established that a Deputy must not profit from his/her position and that potential conflicts of interests are effectively managed.

Legal firms acting as Deputies, who also belong to a wider “full spectrum” legal services firm, haveoften referred work to in-house teams to gain the benefit of advice from trusted individuals, who may have strong track records of providing solid advice, and the additional advantages of being able to draw on that advice in an often more efficient manner than instructing externally.

Such arrangements do however rely on the integrity of the individual Deputies, undertaking adequate due diligence and recording best interests decisions before instructing in-house, and ensuring that in-house referrals are made for the ‘right’ reasons, namely P’s best interests, rather than on a pure profit based determination.

In the matters of ACC, JDJ and HPP HHJ Hilder examined these issues with a high degree of detail.

HHJ Hilder examined three separate cases where, in the first two, the Deputies had instructed internal teams to advise on Education litigation. The third pertained to the instruction of a Partner in the same firm as the Deputy, to act as litigation friend in Personal Injury proceedings.

Although two of the above mentioned cases related to an instruction for in-house Education work; in the first case, the instruction came from the Deputy directly and in the second, the instruction came from P’s parents but was funded by the Deputy.

The significant focus of the judgment was on the potential conflict of interests in Deputies instructing in-house and how that can be resolved. In the case where P’s parents instructed the Education lawyer that had been introduced to them by the Deputy, there was an argument put forward on the Applicant’s behalf that such an arrangement provided a “degree of external detachment” sufficient to meet any concerns about the conflict of interests point. That argument was rejected on the facts of that case.

HHJ Hilder was also critical of Deputies who proceed to incur legal fees that set them on the litigation path, without prior authority. It is clear that if Deputies are to do this going forward, it will be at their own risk as to costs. Prior authority to incur such costs should be sought, and despite a retrospective authorisation being made for JDJ, HHJ Hilder was clear to say that “nothing in this decision should encourage property and affairs deputies to consider that there will on other occasions be a similarly positive determination of applications effectively to authorise litigation after the event…appropriate authorisation should be secured in advance”.

HHJ Hilder provided a useful summary of conclusions at the Appendix to the Judgment indicating that:-

  • The general authority to manage property and affairs in standard Deputyship orders, does not extend to litigation on behalf of P. Specific authority is required for such litigation except where the contemplated litigation is in the Court of Protection in respect of a property and affairs issue or to seek directions in respect of a welfare issue.
  • Authority to make a decision in respect of P’s Property and Affairs encompasses non-contentious legal tasks, including obtaining legal advice, as are ancillary to giving effect to that authority. For example:-
    • Authority to purchase/sell property includes conveyancing;
    • Authority to let property includes dealing with leases/tenancy agreements;
    • Authority to conduct P’s business includes dealing with employment contracts of that business;
    • Preparation of an annual tax return and therefore obtaining advice as to the completion of the return;
    • Discharging P’s financial responsibility under a tenancy and therefore obtaining advice as to the liability under the tenancy;
    • Applying P’s funds so as to ensure that costs of his care arrangements are met and therefore dealing with employment contracts of directly employed carers.
  • Where a Deputy has authority to make a decision/do an act in respect of P’s property and affairs, such authority encompasses steps in contemplation of contentious litigation in the realm of that authority up to receiving the Letter or Response but no further.
    • Authority to let property encompasses taking steps to form a view as to whether there are grounds to evict a tenant;
    • Taking steps to form a view about whether a debt said to have been incurred by P is property payable pursuant to section 7 of the MCA 2005;
    • Includes steps up to but not including the delivery of a letter of appeal in respect of a decision that P is not eligible for continuing healthcare funding;
    • Where authority encompasses steps in contemplation of contentious litigation, that includes obtaining Counsel’s opinion.
  • General authority of a property and affairs deputyship order does not encompass seeking advice or other steps preliminary to litigation in respect of welfare issues; it does encompass making an application to the Court of Protection for further directions/specific authority in respect of welfare issues.
  • General authority does not encompass steps in contemplation of an appeal against the decision of an Education, Health and Care Plan.
  • If circumstances arise where the protection of P’s interests requires action to be taken so urgently that prior authority to litigate cannot be reasonably obtained, a deputy proceeds at risk as to costs but may make a retrospective application for authority to recover costs from P’sfunds. There is no presumption that such an application will be granted.
  • Where a deputy wishes to instruct his own firm to carry our legal tasks, special measures are required to address the conflict of interest:-
    • Prior authority must be sought;
    • Three quotations must be sought in a manner that is proportionate to the magnitude of the costs involved and the importance of the issue to P;
    • The deputy must seek prior authority from the Court if the anticipated costs exceed £2,000 plus VAT;
    • The deputy must clearly set out any legal fees incurred in the account to the OPG and append the notes of the decision making process to the Annual Return.
  • Specific authority is required to use P’s funds to pay a 3rd party’s legal costs, even if those costsrelate to litigation for the benefit of P.
  • If P has capacity to give instructions for particular work, he will also have capacity to agree to the costs of that work.

It is clear that Deputies which belong to a wider full spectrum legal services firm, will need to implement special measures when contemplating an internal instruction, to address the perceived conflict of interests that inherently arises. This does not mean that Deputies can never instruct in-house and indeed there will be many circumstances where such an instruction will be in P’s best interests – in terms of expertise offered and costs incurred.

However, Deputies should be prepared to justify their recommendations for in-house referrals, and to be prepared for the Court of Protection to raise concerns on internally referred work (and costs) where justified. Deputies should also be prepared that authorisation to instruct in-house may be not given as a matter of course. Suitable alternative options should be identified and put forward at the out-set, with P’s best interests at the heart of any recommendations or decisions made.

*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.*

Alexandra Knipe

Joint Head of Court of Protection

alexandra.knipe@anthonygold.co.uk

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