LEGAL COSTS

British government proposes law to reduce payments to lawyers who sue ophthalmologists

The British government has proposed a new law to reduce the fees that lawyers receive for suing ophthalmologists and any other doctor for malpractice.

The proposed law, which should spur discussion of legal cost reforms throughout Europe, could significantly curtail the number of and overall cost of all so-called 'personal injury' lawsuits. The proposal is expected to reach parliament in October.

In announcing the proposal, British Justice Minister Jonathan Djanogly said that by limiting legal costs in such cases, the government was committed to ending 'the perverse situation in which lawyers can be awarded a greater proportion of payouts than claimants,' and 'the fear of a compensation culture which has put a stranglehold on the activities of businesses and public bodies.'

Currently, lawsuits against the National Health Service are costing the British taxpayer about €1bn per year. Of that figure, only 40 per cent actually goes to injured patients. The rest goes to the patients' lawyers.

The two main indemnifiers of doctors in the UK, the Medical Protection Society and Medical Defence Union, have welcomed the proposals to help reduce costs.

According to the latest statistics from the NHS Litigation Authority, the British taxpayer paid out £312m in compensation to injured patients and £456m in fees to their lawyers in 2008-2009.

The proposed law would go a long way to reducing legal costs in England and Wales, where the majority of UK citizens live. The proposal would not affect lawsuits in Scotland or Northern Ireland, which have separate legal systems.

A number of factors contribute to the lopsided expenditure on legal costs in medical malpractice cases and cases involving personal injury. One factor that affects the cost of malpractice lawsuits in England and Wales is that the loser of a case almost invariably pays the legal costs of the winner of the case. In addition, if a patient's lawyer accepts compensation for the patient before the case is heard in court, the lawyer generally does so only if the hospital or doctor agrees to also pay the patient's legal costs.

Another factor that increases legal costs is the conditional fee agreement that a patient usually enters with her or his lawyer when commencing the legal process of suing a doctor or hospital. Under such fee agreements, also known as 'no foal, no fee' agreements, the patient does not pay the costs of his or her own lawyer if he or she loses. If the patient wins his case at trial or if the doctor's indemnifier agrees to compensate the patient before trial, the patient's lawyer receives his fees from the NHS or doctor's indemnifier. In addition to receiving a base fee for running the case, the patient's lawyer is also entitled to a so-called 'success' fee, which can double the overall legal fee. Under current English and Welsh law, the success fee is paid by the losing side.

Under the proposed law, a patient's lawyer will not be entitled to recover a success fee from the losing side. Instead, the lawyer will only be able to recover the success fee directly from the patient, to be paid out of the patient's own personal injury award from the court and only if the lawyer and patient have agreed to such payment beforehand.

The proposed law will also allow patients' lawyers to charge clients a percentage of the compensation they receive for the lawsuit. To reduce the risk that such legal fees don't consume too large a proportion of a patient's compensation, the proposed law provides for the country's chief law officer, the Lord Chancellor, to introduce regulations to set the percentage and exclude from the calculation of such fees any compensation awarded for future care and loss.

The proposed law would limit the circumstances in which patients can recover the cost of any premium paid for insurance against the risk of having to pay the costs of the doctors or hospitals if they lose their case and of any costs incurred by experts retained on patients' own behalf for their case.

Many lawyers will advise clients to take out such insurance to ensure that if they lose their case the insurance company will indemnify them. Under current law and practice in England and Wales, a patient who takes out legal costs insurance and wins can recoup the insurance premium as part of legal costs. Under the proposed law, a patient who wins would only be able to recoup the insurance premium in limited circumstances. To offset any injustice to the patient, the proposed law would allow the Lord Chancellor to introduce regulations to allow judges to award extra compensation to successful patients for the personal injury to assist them in paying additional legal fees to lawyers.