Eduardo Reyes discusses the threat to medical negligence lawyers

The knock-on effect of hitting personal injury claims hard last April has been to disrupt the fragile medical negligence claims market in ways that were not anticipated by the Ministry of Justice as it moved to ‘curb’ our supposed ‘claiming culture’.

 

Of course, changes that came in on 1 April 2013 were already set to hurt medical negligence claims. The ‘Jackson reforms’ dealt a blow to law firms advising clients on medical negligence claims by making any ‘success fee’ non-recoverable from a losing defendant.

 

The position regarding experts’ fees also worsened – whereas before 1 April 2013 the winning claimant could recover after-the-event litigation insurance premiums in their entirety, now only the insurance premium for expert fees could be recouped from the losing defendant.

 

With cases often taking three-to-five years to resolve, this made the economics of running medical negligence cases challenging to say the least.

 

No medical negligence lawyer would want, as they say, to start from here. But many – committed to this area of practice and to their clients – can stretch to handling many, if not all, of the cases they would have taken on before.

 

The position they were in was unfair and challenging, but not impossible.

 

What was not predicted is the commercial chaos being wrought by other personal injury lawyers piling into medical negligence in the misguided belief that with decent returns gone for many personal injury cases, the lack of a fixed costs regime in medical negligence provided their strategy for continuing to trade.

 

Evidence that this is happening is not just anecdotal. It can be seen in what insurers report is a sharp increase in the number of firms seeking after-the-event insurance cover for handling medical negligence claims.

 

In particular they point to an increase in firms seeking ‘delegated authority’ as part of the cover provided for cases. (Delegated authority is provided before a claim being brought, and before experts’ reports have been produced.)

 

I think it’s hard to overstate the commercial and political chaos likely to flow from this – and the chaos is not limited to work lost to new entrants, problematic though that may be.

 

To secure the position they did with regard to costs, medical negligence lawyers, and their representatives, were able to draw down a great deal of moral capital.

 

Against news stories on the cost to the NHS of claims they could draw on the stories of tragic cases where a medical negligence solicitor had ably secured what their client needed, often after years.

 

For one category of medical negligence case – obstetrics claims – legal aid was even retained. In the climate that prevailed at the time of LASPO, that was a real achievement.

 

The point of using a specialist lawyer is not down to their insight into the relevant bits of the CPR, but their knowledge of how problems combine in medical negligence cases – and the insight they have into their clients needs.

 

If that ceases to be the common experience of instructing a lawyer in a medical negligence case, then the balance of the debate starts to change.

 

It’s not hard to imagine the arguments that will be put for further reform – from citing unmeritorious cases that were taken on by have-a-go PI lawyers who did not understand the case they were looking at, to clients badly advised to take an inadequate settlement because it’s quicker than running a contested case over three-to-five years.

 

There is, of course, some irony in medical negligence now being seen by some practitioners as a sort of ‘safe haven’.

 

It has never been an area of the law where high margins could be made – the up front costs and the lock-up periods are deeply unfavourable. By contrast, through the recession general personal injury law was one area where recruitment continued (others were the smaller fields of biotech, energy and telecoms).

 

But practices needing ‘out’ of general PI are not simply closing their doors or investing in change – the business model they already have is instead being transferred wholesale to medical negligence claims. That includes a style of ‘client capture’ that has done so much to damage the image of claimant lawyers on commercial daytime TV.

 

In truth, I think we are witnessing a certain kind of PI practice dying a slow death – unfortunately, the manner of it passing is putting another area of law, a hugely important one, in commercial and political jeopardy.

 

 Eduardo Reyes is Features Editor at the Law Society Gazette