Legal Aid, Sentencing and Punishment of Offenders Bill

My Lords, we come to the first of a group of amendments dealing with clinical negligence. The noble Lord, Lord Phillips of Sudbury, has asked that his Amendment 101A be degrouped, and I ask the same in respect of my Amendment 137. Amendment 15, in the name of my noble friend Lady Grey-Thompson, should cover clinical negligence as a whole. My amendment covers only the cost of expert reports, which, as one noble Lord said in Committee, is the very least that should be covered by legal aid. If my amendment succeeds, it will not in any way pre-empt Amendment 15. If that amendment then succeeds, as I hope it will, then my amendment will lapse at Third Reading. The difference between this amendment and many that have been debated in Committee—and, indeed, so far on Report—is that it will actually save money. The question is this: what is the best way of funding expert reports in clinical negligence cases? Unlike the previous amendment, that question is not likely to give rise to any great emotion. The method proposed by the Government in Clause 45 would cost between £16.8 million and £25 million. The cost of doing exactly the same under legal aid would be between £6.3 million and £6.9 million. If those figures are correct, as I believe them to be, that in itself should be enough to commend the amendment to the Minister. I will come back to justify those figures a little later, but first I need to say a little about the background. As I am sure noble Lords know, clinical negligence claims are funded in two ways: legal aid or conditional fee agreements supplemented, in a majority of cases, by ““after the event”” insurance, the purpose of such insurance being to protect the plaintiff against an adverse order for costs. Under the current law, the premium charged by ATE insurers is recoverable from the defendants, usually the National Health Service, even if the plaintiff loses. That system was introduced by Section 29 of the Access to Justice Act 1999. The Government then listened to concerns. It is perhaps best that I should describe those concerns in the words of Mr Jonathan Djanogly in the other place. Referring to expert reports, he said: "““Such reports, which can be expensive, are often necessary in establishing whether there is a case for commencing proceedings, which raises particular issues if recoverability of ATE insurance is abolished. In responding to these concerns, clause 43””—" as it then was— "““provides, by way of exception, for the recoverability of premiums in respect of ATE insurance taken out to cover the cost of expert reports in clinical negligence cases””.—[Official Report, Commons, 2/11/11; col. 1027.]" If we will not cover clinical negligence as a whole, as my noble friend Lady Grey-Thompson would wish, we all agree that at the very least we should cover in one way or another the cost of expert reports. To that extent, Mr Djanogly was absolutely right. The trouble is that he has chosen the wrong way to set about it. Lord Justice Jackson, in his lecture in Cambridge in September 2011, described the Government's proposals in Clause 45 as, "““the most expensive and inefficient mechanism which it could be possible to devise in order to achieve””," the Government's objective. It is easy to see why he used such language. One has only to look at new subsections (2) to (4) in Clause 45. They require yet more regulations to be made by the Lord Chancellor, at the very time when we are trying to reduce the burden of regulations in civil litigation. The regulations are bound to be complex. If the maximum of the relevant part of the premium, as it is called, is too high, the regulations will not achieve their objective. On the other hand, if it is set too low the insurers are sure to find one way or another around it. It is surely much better, and certainly much simpler, to cover the cost of expert reports by the well worn path of legal aid. I find it difficult to see why the Government have chosen not only the most complicated way of achieving their objective but the most expensive, which brings me back to the figures. In Committee, I put forward a simple calculation on instructions, as lawyers say. I took £5,000 as the average cost of reports in clinical negligence cases. If you assume that the plaintiff has a 50:50 chance of success, the insurer must charge at least £5,000 if he is to break even. To that he must add something to cover his overheads and profit. The figure that is usually taken for that purpose is 25 per cent, so the premium will not be less than £6,250. If you then assume that ATE insurance was used in half the cases settled by the National Health Service in 2010-11, you simply multiply £6,250 by 2,700 and get a figure of £16.9 million paid out by the NHS. It is as simple as that. Compare that to the £6.3 million to £6.9 million spent on achieving the same result by legal aid. In an e-mail sent on 1 March, the Government accept that the cost of Clause 45 will be £23.7 million if you accept, as one surely must, that the mark-up will not be less than 25 per cent. However, they say that the £6 million cost of legal aid does not take full account of the cost of taking that route. They say that that cost should be £17.5 million, not £6.3 million. However, even on their figures of £17.5 million and £23.7 million, the cost of Clause 45 will exceed that of legal aid by £6.2 million, which I would hardly regard as ““relatively small”” or ““marginal””—the words used by the Government to describe that difference. However, in truth, the saving is much greater than that to which the government figures point because the figure of £17.5 million that the Government have put forward is erroneous. It includes the cost of expert reports in successful cases as well as unsuccessful ones. The cost in successful cases is recorded by the Legal Aid Fund but is not—this is the vital point—paid by it. If you exclude successful cases from the figure of £17.5 million given by the Government, you come right back to the figure of £6.3 million, which is the figure that I have given all along. On that view, the saving is not what is conceded to be a saving by the Government, but one of £10.6 million. These figures were contained in an e-mail that was sent to the Government on 2 March, which has not, as far as I know, been answered. I beg to move.