Another topic which is starting to crop up fairly frequently now is the reasonableness of various funding arrangements changing just prior to the rule changes in April 2013.
Would it be reasonable for a legally aided client to discharge the certificate and move to a CFA? A January 2015 SCCO case decided by Master Leonard (AMH – v – The Scout Association) found that it could be. The decision, referring to an earlier decision of Master Gordon-Saker in LXM v Mid Essex Hospital Service NHS Trust  EWHC 90185, demonstrates that the key point is whether the decision was reasonable in all the circumstances. Thus, the ultimate effect on costs to the paying party should not be determinative.
In AMH, Master Leonard found that the rule changes meant that it was appropriate for the Solicitor to go to the client with advice on funding options. He found that the advice was not as comprehensive as it should have been (with more being required in relation to the effect of QOCS, the 10% general damages uplift and the statutory charge implications) but that just because the advice was not comprehensive, did not necessarily mean that the decision was unreasonable. There, he was particularly swayed by the fact that the CFA offered to the client was a “CFA Lite”, meaning that the client would recover his damages without deduction. It seems that his decision might have been different if a “normal” CFA had been proposed, but he stressed that such issues were case specific. It seems therefore that if full advice is given and an informed decision is made by the client, the decision to change may well be found to be reasonable and the additional liabilities therefore recoverable.
The issue has arisen on a similar set of circumstances where Counsel has been instructed just prior to the rule changes, but may have taken little by way of substantive steps. However, Counsel has been retained on a CFA where Counsel is prepared to take the risk of the “no win no fee” element and where the client is content that the risk of having to pay costs in the litigation has been significantly reduced.
Yes, this does seem like a way of defeating the reforms in a sense. However, such arrangements seem to be perfectly lawful at the point that the agreement was reached between the Solicitors and Counsel and we doubt whether it would be right to find that subsequent Success Fees of Counsel were unreasonably incurred where all of the “hoops” required for a valid CFA have been implemented.
No doubt paying parties will wish to carefully scrutinise the funding arrangements as is done as a matter of course on virtually all matters anyway. However, in the absence of some mala fides, it seems to us that the additional liabilities are likely to be recoverable in these circumstances.