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The Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) has finally been approved by both Houses of Parliament after a key compromise was reached allowing mesothelioma sufferers to keep all of their compensation, pending  a further review and report by the Lord Chancellor.

The Lords’ amendment to LASPO in relation to industrial disease cases instigated a passionate and emotive debate by MPs in the Commons on the 17 April. The Lords proposed to exclude industrial disease cases from the Bill’s provisions relating to ‘no win, no fee’ agreements, which provide that success fees (capped at a maximum of 25%) imposed by claimants’ solicitors and the after-the-event insurance premiums will not be recoverable from defendants, but will come out of claimants’ compensation.

ATE insurance

Labour MPs were highly supportive of the Lords’ amendment. John Woodcock, Labour MP for Barrow and Furness, explained that on average, those who successfully pursue claims for mesothelioma see compensation in the order of £65,000; therefore, if industrial disease cases were not excused from the provisions, their lawyers could receive 25% of that £65,000. He said on top of that, claimants’ after-the-event insurers could take an increased premium and – because mesothelioma claims are risky – those premiums can be very high indeed.

Toby Perkins, Labour MP for Chesterfield, claimed the government was showing a real lack of empathy with the situation that mesothelioma sufferers and their families face. He, along with a number of fellow Labour MPs, gave heart-wrenching personal examples of those who had died of the disease in their constituencies. Mr Perkins spoke of Roy Redfern, a joiner in the building industry, who died before he could obtain compensation. He advised the House of Mr Redfern’s wife and daughter’s comments: that if they had been told costs would be attached at the time of the tragedy, they would not have proceeded with the claim. Mr Perkins urged MPs to back the Lords’ amendment to the LASPO Bill and show that the Commons has a heart.

Success fees and LASPO

However, Justice Minister Jonathan Djanogly strongly opposed the Lords’ amendment. He said that if it was accepted, claimants in mesothelioma cases would have an advantage over others who may be suffering from equally debilitating conditions and this could not be justified. “Crucially,” he said, claimants’ financial losses and future care costs would be protected and that the success fee would only be deducted from general damages (i.e. the compensation received for the injury suffered.) He also reminded MPs that the Bill intends to increase general damages by 10% to offset a success fee capped at 25%. However, this argument was met with criticism, as it was felt by some that this still left a shortfall of 15%.

Mr Djanogly commented that ‘no win, no fee’ agreements were supposed to promote access to justice, but instead they resulted in claimants pursuing risk-free litigation, inflated solicitors’ costs and punitive legal costs for defendants. He said the success fee is the core of the problem, and that it has caused an unfair balance between claimants and defendants. He advised that the system needs to get back to the position where the client has an interest in the amount the solicitor is being paid.

When asked whether the Commons disagreed with the Lords’ amendment, there was no consensus. A vote took place and despite the emotional pleas of many MPs, it was overturned on the basis that it was not appropriate to make an exception.

Respiratory diseases

The LASPO Bill bounced back again to the Lords on 23 April for consideration of the Commons’ rejection of the amendment. The Lords defied the government again and voted by 214 to 205 to reinstate the amendment that exempts respiratory (those arising from exposure to harmful substances) industrial disease cases from the new ‘no win, no fee’ regime. Lord Alton, a former Liberal Democrat MP, said: “I suspect when you are dying, especially when you are dying from an excruciating and debilitating disease, you may have other things on your mind than watching the lawyer’s clock. It is not the job of someone dying of mesothelioma to become the government’s regulator or watchdog.” However, attempts by some Lords to widen the scope of the exemption to include all industrial disease claims were comfortably defeated by 220 votes to 174.

The Bill pinged back to the Commons on the 24 April, and that House seemingly admitted defeat by proposing an amendment in lieu. The amendment provides that clauses relating to non-recoverability of success fees and after-the-event insurance premiums from defendants will not apply to claims for diffuse mesothelioma until the Lord Chancellor has carried out a review of the likely effect of such clauses in these types of cases and has published his findings in a report.

Clinical Negligence Claims

The Lords had voted to retain legal aid for under-18s in clinical negligence cases, together with other types of cases, such as asylum law.

However, during the Commons debate on the 17 April, Justice Secretary Ken Clarke confirmed the government’s opposition to such an amendment to the Bill. He began by expressing his concerns on the tremendous growth of the clinical negligence industry and described such cases as “tricky”, on the basis that all the money that is spent on compensation, legal advice, expert witnesses and so on comes out of the NHS budget. He said the number of claims has doubled in six years and lawyers’ total costs have gone from £83 million in 2006-2007 to £195 million in 2010-2011. He concluded that the clinical negligence industry has done very well.

Neurological damage

Mr Clarke confirmed that the government wants to remove legal aid for all clinical negligence claims involving children, as it is “unnecessary and wasteful”. However, he explained that the government is happy to retain legal aid funding in obstetrics cases where babies have sustained neurological damage during pregnancy, childbirth or in the immediate post-natal period. He proposed that legal aid would also be preserved in cases where a clinically negligent act happens when the child is “say, at six months old,” in accordance with the Exceptional Funding Scheme, to ensure the protection of the individual’s right to legal aid under the European Convention on Human Rights. Mr Clarke’s proposals are problematic, in that the definition of “immediate post-natal period” is uncertain, as is the maximum age at which a child can claim legal aid, following a negligent act. Therefore, if these proposals are to be workable, the government will have to provide concrete and clear definitions.

Jenny Chapman, Shadow Justice Minister, described the government’s decision to oppose the Lords’ amendment as “appalling”. She went on to say that “asking children to navigate, without advice or representation, a civil justice system that can be fiendishly difficult even for adults is quite simply wrong.” Ms Chapman was supported by a significant number of MPs. However, when asked whether the Commons disagreed with the Lords’ amendment, a vote was required: 294 MPs disagreed and 250 MPs agreed, meaning the amendment was overturned. The reasoning given was that the amendment would alter the financial arrangements made by the Commons.

Legal aid

Interestingly, the Lords had also inserted an amendment that would retain legal aid funding for the purpose of obtaining expert reports in clinical negligence cases. Ms Chapman said it was a “just and economically intelligent amendment” but the amendment was overturned by the Commons on the basis that it would again alter the financial arrangements made by the Commons.

On the 23 April, the Lords surrendered to the Commons and did not insist on reinstatement of their amendments. Therefore, the government has succeeded in removing the provision of legal aid for the purposes of obtaining expert reports in clinical negligence cases and, with limited exceptions, children will no longer be able to receive legal aid funding when pursuing such claims.

The LASPO Bill returned to the Lords yesterday and consensus was finally reached between both Houses, as the Lords accepted the Commons’ willingness to explore the impact of the Bill’s ‘no win, no fee’ regime on diffuse mesothelioma cases, prior to it taking effect. For now, it seems the Lords have triumphed in their resilient stand to protect mesothelioma victims’ compensation, although we will have to wait for the Lord Chancellor’s report for the final verdict.

The race was on for both Houses to agree the wording of the Bill before the parliamentary session ends early next week; however, this has now been achieved and the Bill awaits royal assent by the Queen. Once that has been given the LASPO Bill will become law, although the majority of provisions are not expected to come into force until April 2013.

For more information, contact our Clinical Negligence team or call 0117 904 6000.