Changing funding arrangements: briefing clients is key

The case Ramos v Oxford University NHS Trust is a reminder that solicitors must keep clients fully briefed on funding options, says Gordon Exall of Zenith & Hardwicke Chambers.

feeWhat issues did the case raise?

This case looked at the reasonableness of a decision to move from legal aid to a conditional fee agreement (CFA) shortly before 1 April 2013, when the Legal Aid, Sentencing and Punishment of Offenders Act 2012 restricted the right to recover success fees and after the event (ATE) premiums.

In short, if the decision was reasonable, the additional liabilities were recoverable from the defendant. If the decision was not reasonable, the additional liabilities were not recoverable. This case was significant because it shows the importance the courts place on solicitors giving clients proper and sound advice in relation to costs and funding for those costs to be recoverable.

How did the court approach the legal issues in the case?

The court concluded that the claimant’s solicitor failed to carry out a full and adequate analysis of the advantages and disadvantages to the claimant of switching funding arrangements. The solicitor’s advice that there was no option but to change funding arrangements was based on broad assumptions that lacked any sound foundation. The solicitor had not advised the client that changing funding meant that the claimant would not be entitled to the Simmons v Castle 10% uplift on general damages (Simmons v Castle [2012] EWCA Civ 1039, [2013] 1 All ER 334).

On the basis of the advice given, the court held that the claimant was not in a position to make an informed decision about changing the funding arrangements, this rendered the change unreasonable. The success fee and ATE premium were therefore not recoverable.

How helpful is the judgment in clarifying the law in this area?

The judgment is a warning to solicitors that they must ensure that their clients are fully informed when it comes to funding arrangements, particularly when changing those arrangements. The reasonableness of costs that have been incurred not only depends on the costs being reasonable in themselves, but whether they were incurred on the basis of adequate advice and understanding.

There are similar cases where the decision to change funding arrangements was held to be reasonable. In Milton Keynes NHS Foundation Trust v Hyde [2016] EWHC 72 (QB), [2016] All ER (D) 158 (Feb) it was held that a switch from legal aid to a CFA was reasonable. In that case the claimant had exhausted the costs that could be claimed under the legal aid certificate and the switch was a reasonable one. This decision was subsequently upheld on appeal.

What does this all mean for lawyers and their clients?

It is worth noting that the claimant’s solicitor in this case had to give evidence and be cross-examined on the decision made to change funding. The absence of any documentary evidence and the inability of the solicitor to recollect giving advice on key matters was not helpful.

Under cross-examination, Mr Sankey admitted that he was unsure whether he had discussed Simmons v Castle with Mrs. Ramos. It is for the claimant to establish on the balance of probabilities that he did, and the evidence offered in support of that proposition is not adequate to do so. Cross-examination has happened in other similar cases. It is important that advice on funding, as with any advice, is supported by adequate documentation and the solicitor is able to justify the advice given.

How does all this fit in with other developments in this area? Do you have any predictions for future developments?

In one way this was a historical blip following changes in the law relating to conditional fee agreements. The courts have held that it was perfectly proper for solicitors to review funding arrangements when it was clear the law was changing. However, the trend is clear—this type of change can only be justified if it was, ultimately, for the client’s benefit rather than the lawyers.

Interviewed by Anne Bruce.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

First published on LexisPSL Dispute ResolutionClick here for a free trial.

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