What to expect from the LDFRC scheme

Sean Linley

Senior Costs Draftsperson/Assistant Manager

Carter Burnett

There is continued uncertainty about how and when the regime for fixed costs in Clinical Negligence claims with a settlement value of less than £25,000 (or the Lower Damages Clinical Negligence Fixed Recoverable Cost (“LDFRC”) scheme, to give it its snazzier title) will be implemented. It would be easy to wade through speculation and haphazardly set out expectations but instead the focus here will be on tangible details.

The Department of Health published its response to proposals for disbursement recovery in claims brought under the LDFRC in May 2024. Perhaps as a harbinger the way the regime has thus far been approached; the consultation originally ran from 15 September to 27 October 2023 before it was extended to 22 December 2023 after one of the consultation questions was omitted from the online survey. It would take until 8 May 2024 before the response was ultimately published.

Fast forward and the desired October 2024 implementation looks like it will now not happen. We have a new government and unsurprisingly Clinical Negligence fixed costs are not one of Sir Keir’s key pledges or priorities. At this stage there is a great deal of uncertainty over what will happen next. Nonetheless it’s an interesting trawl to manoeuvre through those details we have which takes us back to the disbursement consultation response of 8 May 2024.

So, how will disbursement recovery operate under the LDFRC? The Department of Health set out a series of key proposals in the consultation response:

1. Expert Fees

The cost of expert report fees will be recoverable separately. They will remain subject to the tests of reasonableness and proportionality. Against a backdrop of rising expert fees, there are legitimate questions around how a reduction in solicitor costs will impact what is viewed as a proportionate expert cost. There’s a clear tension. It’s worth flagging that the Department of Health at this stage haven’t signalled any intention on a cap for expert fees, despite requests from some in the consultation for them to explore the viability of it.

And what of agency fees? Many practitioners will not be strangers to medical agencies, nor the frequent challenges now raised seeking a breakdown of the expert’s actual fees and the agency element. At the time of writing, we have an increasing number of conflicting first instance decisions but nothing binding on the question of whether an agency breakdown is required.

The question in fixed costs cases involving agency extends to whether the rules permit recovery of agency and whether agency work (which is work the solicitor would otherwise have done) is already captured by the solicitor fixed costs (note the DoH’s view elsewhere that fixed costs cover pagination).

A noteworthy (but cryptic) comment from the Department of Health has sought to address this issue:

“Wording around disbursements for expert fees will make clear that associated costs of engaging with the claimant and their legal representatives in the production of the expert report are included alongside the cost of the report itself in the recoverable disbursement.”

The huge caveat here is that (again at the time of writing) there are no published rules. There is, however, a possible pointer towards the fact that agency fees will be recoverable in principle. This may not dispel a requirement to give a breakdown, but it may prevent arguments from paying parties that agency fees are irrecoverable in fixed costs cases. The devil will be in the detail.

2. Inquest Costs & Associated Disbursements

A sigh of relief, the LDFRC will follow the wider fixed costs reforms in allowing Inquest costs and associated disbursements on a non-fixed basis. Ultimately this may mean that Inquest costs could well outweigh the costs of any actual litigation! Inquest costs & disbursements will remain subject to the Gibson principles of whether the work is of use in the civil litigation.

3. Counsel

The only recoverable pre-issue Counsel fees will be those which relate to Part 8 Approval Hearings. It’s assumed (though not expressly confirmed) that Approval Advice will also be separately recoverable. This is of course good news. Though it’s worth pointing out that under October’s FRC regime Protected Parties are expressly exempted. There’s no clarity on why they are to be treated differently for Clinical Negligence claims. The flaw here is that an Intermediate Track Clinical Negligence claim involving a Protected Party would be fully exempt from fixed costs (assuming settlement over £25,000).

Fundamentally though the headline here is that the intention is that no other pre-action Counsel’s fees will be recoverable. For some practitioners this may necessitate a change in approach, no more pre-issue advice. Indeed, as one barrister remarked “if you want to know what your prospects will be, issue then we can tell you that you have none”.  

If you do want pre-issue advice and it’s not recoverable then who pays? The solicitor? The client? It won’t be the paying party.

The other broader concern will be if, as expected, the rules apply to settlement value rather than claim value then there is a possibility that a claim with an expected value of over £25,000 (and thus falling outside the LDFRC) could end up retrospectively in it if the claim ultimately settles for less than £25,000. Those claims could be brought based on a different regime applying. Those borderline cases could be tricky to assess.

It’s worth reflecting that there is no express provision for pre-action Counsel fees in the October 2023 fixed recoverable costs regime either, though it is at least arguable under the relevant disbursement rules.

 4. Court Fees

It may seem odd at first glance to deal with Court Fees in a scheme which will only apply pre-issue. However, the DoH have stated that the following court fees will be recoverable:

1. Court fees relating to an application for pre-action disclosure.
2. Court fees for issuing proceedings where limitation is due to expire and those relating to any subsequent extension for a stay in the proceedings.
3. For claims involving Protected Parties or children then court fees relating to approval proceedings will be recoverable.

5. ATE

The recoverable element of the ATE premium (the part relating to liability expert reports) will continue to be recoverable between the parties. In the consultation response there was an overall acceptance as to the importance of ATE insurance and the role it plays in providing access to justice. Note, though that some respondents wished for the government to “explore approaches to ensuring that the cost of premiums was reasonable and sustainable.”  It should be stressed that there is no intimation that there will be any changes over how premiums are assessed and it’s likely that the approach described in West & Demouilpied will continue to apply.

What about other disbursement types?

The answer is to assume these will not be recoverable under the LDFRC. There are some legitimate concerns surrounding certain disbursements. A good example is translator/interpreter fees. If these are prospectively not recoverable then how does this square with access to justice? (see Santiago v MIB). Tracing fees were another issue raised in the consultation. This can be necessary, for example, where bringing action against individuals such as GPs.

On translation/interpretation & tracing fees the Department of Health’s view is thus:

“We would not support the idea that translation or tracing services should be separately recoverable as disbursements, since they are not often integral to lower damages claims in the pre-issue stage and, on the occasions where they may be required, they can be provided for within the existing fixed costs envelope.”

It’s hard to see how the DoH’s stance on this can hold under scrutiny. Language should never be a barrier to access to justice and the notion that translation/interpreting is never required pre-issue is baffling. Similarly, there may not be access to justice if the Defendant cannot be traced. It seems commonsensical that such a service would be required pre-issue (and not after). Will we see challenges to these proposals once the rules are published? We saw Judicial Review proceedings brought in relation to October’s reforms and access to justice was cited as a key concern. It won’t come as a surprise if this arises again.

Another common question arising relates to nursing pagination fees. The LDFRC protocol is widely expected to require Claimants to provide a collated & paginated set of records with their Letter of Claim. As it stands the DoH’s view is that pagination/collation can be “reasonably achieved without classifying that activity as a disbursement, for these lower damages claims, or providing for recoverability”. So, in short, if you want to instruct a pagination firm either it’s coming out of the fixed costs pot or the Claimant’s damages.  Another victory for access to justice?

Key findings

The biggest takeaways from the disbursement consultation response are that disbursement recovery will become far more restrictive (more so than October’s FRC reforms) and this will most likely necessitate a change in approach to conducting claims by legal representatives on all sides and see either practitioners or Claimant’s themselves paying for more of their representation.

Questions remain around prospective escapes from the LDFRC (if indeed there are any), how costs recoverability will operate post-issue and whether there will be any viability to argue for disbursements (like translation) which may be necessary to bring the case. On the latter it appears there will not be. Hopefully publication of the rules will bring about some clarity.

There is a real tension between the Department of Health’s stated desire for “lower, more proportionate cost” and maintaining access to justice. Any regime which results in a Claimant having to pay more themselves can’t be a good thing. And if practitioners find claims are less viable, will they be less likely to take them on?

Taking a purely objective view then the discussion around what is reasonable and proportionate isn’t a conversation that can be ignored but the elephant in the room is that fixed costs as a concept is a dictation of what is and is not reasonable to spend on a claim. It treats all claims as the same which is inherently untrue. If cases are not profitable, will we see firms turning down lower value claims?

In the years to come the key metric will be to see whether there is a correlation between reported incidences of negligence and the number of claims. If the number of incidences remains static (or increase) but the number of claims fall, then this would evidence that the LDFRC is not working. It’d also be a significant defeat for patient safety, something which we should all have concern for.

As the regime beds in then all sides should be monitoring the impacts and where any negative consequences arise there will need to be accountability.  At the heart of it all are individuals who through no fault of their own find themselves suffering injury and loss (and sometimes worse) and it’s a fair question to ask why such individuals are likely to be left to having to meet more legal costs themselves and where that’s not possible may find it increasingly difficult to find representation. Perhaps somewhat ironically and as a final point, Litigants in Person are expected to be exempted from the LDFRC.

Sean Linley is Senior Costs Draftsperson/Assistant Manager at Carter Burnett.