The role of Deputies in PI cases

The role of Deputies in PI cases Christopher F Sharp QC: St John s Chambers, Bristol NOTES 1. It is not the function of this talk to discuss the role, as such, of the deputy in cases of brain injury, that would involve much more detail than time allows and would be best provided by a professional deputy. What is addressed here is the cost of the deputyship and how to provide for that in a personal injury case. 2. The costs of a deputy In any personal injury claim involving brain injury where the capacity of the claimant has been lost, there will be a need to ensure that that the costs of the consequences of administering the claimant s estate are adequately provided for. Those costs, especially since the introduction of the Mental Capacity Act 2005, the Code of Practice and the Court of Protection Rules 2007, have become a very significant element in the claim and can frequently represent a sum of several hundred thousands of pounds. Annual administration fees alone in more complex cases can amount to 15,000 + VAT or even more and if there is a multiplier of 20 + years this is obviously a major part of the claim. In addition there will be the costs of applications to the Court, and provision needed for less routine work. Page 1 of 14

3. In order to ensure that the projected costs are adequately assessed it will be essential for the claimant s team to liaise with the deputy and gain a realistic estimate of the costs that will be incurred. 4. Professional or Lay Deputy? The first question will often be: who is to be the deputy? Manifestly, a professional deputy is a lot more expensive than a family member. Frequently claims start off with a member of the family acting in this role. With children it is often a parent; with adults, a spouse or sibling, but also again it may well be a parent. But as time passes, and especially once substantial interim payments are received and have to be administered, the burden on the lay deputy becomes ever greater and they find it more difficult to cope. Moreover, where the deputy is a parent, the passing of the years can not only make the burden heavier, but then the realisation comes that the claimant will outlive the parent and someone else will have to take up the role. In these circumstances, it is often the case that a professional deputy will be appointed. 5. There may be cases where a separate Health and Welfare deputy will need to be appointed but in this talk the focus is on the Property and Affairs deputy who is managing and administering the financial affairs of the claimant (but who may also have to deal with some welfare issues). 6. There is much benefit, to the claimant and her/his family, and also to the litigation solicitor, in the appointment of a professional deputy experienced in dealing with brain Page 2 of 14

injury personal injury or clinical negligence cases. They are able to bring a great deal of practical knowledge to the arrangements that need to be made, the inquiries that need to be pursued and the practicalities of the administration of the claimant s assets. Professional deputies also bring experience of navigating the complexities and frustrations of dealing with the Court of Protection and the Office of the Public Guardian, where delay is frequent and a lay deputy can have significant difficulties dealing with them. 7. Family members can also find it more difficult to resist unreasonable demands from the claimant for funds whereas a professional deputy can more easily keep an arms length relationship with the claimant. Moreover, where family members are providing day to day care the burdens of the administration of the claimant s affairs on top of everything else can be very heavy. 8. However, it is usually good advice to secure the appointment of a professional deputy at the outset for a further reason. If there is no professional deputy it will be much harder to claim for the future fees of a professional deputy. If there is a professional deputy in place there is an established need and an established model. Of course, there are cases where once the complexities of the first few years (the setting up of the care regime, the purchase and adaptation of a property, the acquisition of appropriate equipment, the taking of investment advice) are out of the way, the professional deputy may give way to a family member again, and it may well be that the Page 3 of 14

Defendant will suggest this may happen (so as to drive down the allowance for future costs). It may indeed be something imposed by circumstances on a claimant as a way in which the claimant can make an inadequate recovery of damages stretch a little further. 9. But if it does happen then the Court of Protection will have to be satisfied that the lay person can adequately fulfil the task, and there may well be consequences in terms of the security required to be given under s.19(9) of the Act. The case of H (A Minor and an Incapacitated Person) [2010] 1 WLR 1103 HHJ Marshall QC) provides (at para 106) a useful review of the factors governing the selection of a deputy and especially the level of the security the Court will require. Importantly the judge in that case relied on the availability of adequate professional indemnity insurance cover to reduce the level of the security required from a professional deputy, who will usually, of course, be a solicitor or accountant. Indeed there will be cases where it may be difficult for a lay deputy to obtain the necessary security bond. 10. Senior Judge Lush has in fact suggested (in an article in the BABICM newsletter for Autumn 2011) that the CoP prefers that in all but exceptional cases, professional deputies rather than family members should be appointed as the deputy in cases involving large sums of damages, at least for the first few years after settlement of the claim. 11. However, as in many areas of personal injury litigation, there are firms who are seen as expensive and whose costs Page 4 of 14

will be challenged by the insurers, and in these circumstances it is essential that the costs projections are adequately, and ideally independently evidenced. 12. Evidence to support the claim To this end it is frequently preferable, rather than simply relying on the costs projected by the person who has been appointed or is proposed as the professional deputy, to secure an independent report from an experienced deputy (from another firm) setting out : a. The functions that will need to be carried out by the deputy; b. The applications that will need to be made to the Court over the claimant s lifetime (from the initial application onwards); c. The Office of the Public Guardian (OPG) and the Court of Protection fees structure under the Mental Capacity Act 2005 (effective since 1 October 2011). d. The amount of time that will typically be required in regular supervision and administration. The Deputy s costs are based on the amount of time spent on the case. The Order of the Court of Protection provides the basic authority for the Deputy to charge for the work involved. These costs are subject to detailed assessment by the Senior Court Costs Office (SCCO), unless Solicitors' Fixed Costs apply. The circumstances of the particular case will dictate the time likely to be required. For instance, where the claimant retains some degree of capacity he may be much more Page 5 of 14

demanding of the deputy s time than a claimant in a persistent vegetative state; or a claimant with a significant organic personality disorder may give rise to a great deal of work for the deputy. The framework of the Act is based on allowing a client to make decisions that he or she does have capacity for, and ensuring greater involvement of the client (and family/carers etc) in the decision making process where a Deputy is making the decision (see s.4 of the Act). The deputy will therefore need to be fully briefed on the medical, psychological and psychiatric evidence and the evidence of the case manager, so as to be able to assess what the demands of the role may be, and his/her experience will be of importance in informing this assessment; e. The annual Deputy s costs of preparing and submitting the Court of Protection accounts. f. The need to replace the deputy (which especially in the case of a younger claimant with no significant loss of life expectancy may be necessary several times and perhaps every 10-15 years, although with the use of trust corporations this can be avoided to some extent) g. The need for and the costs of one off transactions such as a Statutory Will (and any review thereof) h. The costs that will be incurred in the assessment of costs by the SCCO (court fee, draftsman s fees etc) i. Other fees such as the cost of the Court of Protection medical certificate, which will be required for each application, and the premium for the bond Page 6 of 14

that provides the security required of the Deputy by the Court; j. An assessment of the contingency fund that should be allowed for emergencies and unforeseen work that may arise. 13. A solicitor s costs for acting as a deputy are controlled by the CoP and the provisions of the CPR as to assessment of costs are applied in the CoP by rule 160 of the CoP Rules. Guideline rates are provided in bands depending on where the solicitor works. There are three London bands and two national bands and the deputy will need to identify the band which applies to his or her firm. Fees are divided into 4 grades (A to E) depending on post qualification experience and status of the fee earner. The current rates have not changed since April 2010. The independent witness will employ these guidelines in projecting the costs. 14. Presentation of the evidence Experience shows that the statements of deputies in these matters can become lengthy, sometimes unstructured and occasionally tendentious. It is suggested that ideally the statement: (i) Has structure;; (ii) Sets out the general principles under which the deputy s functions will be delivered; (iii) Addresses, where relevant, the reasons why a professional deputy is to be preferred in the case in hand; Page 7 of 14

(iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) Reviews the particular facts of the instant case so far as they affect what tasks and duties the deputy will have; Identifies the CoP and OPG costs that will be incurred; Identifies the regional band for the guideline costs, and the grade of fee earner who will be engaged so as to provide the basis of the costs projections; Estimates the time the deputy will typically be engaged over each year; Identifies specific periods of additional time required (eg the year of the settlement and the year of implementation); Identifies specific events that may require further input; Identifies one off expenses; Describes the process of cost assessment and the expenses that will be incurred in that process; Explains the basis for the assessment of a contingency sum; 15. It is then helpful (indeed essential) to have a summary which may well be in tabular form. An example might take the form of the Appendix to this Note. The annual multiplicands can then be carried across to the Schedule of Loss where the appropriate multipliers can be applied and the one off expenses inserted (subject where necessary to discounts for accelerated receipt) 16. Resolution of differences Page 8 of 14

It is sometimes the case that the insurers will want to adduce their own evidence on the projected costs of the deputy and a practice which can be helpful is to provide in the directions obtained at the CMC for the claimant to file evidence of such costs by (date), the defendant then (if so advised) to file evidence in response by (date) and thereafter the respective experts to meet to identify any areas upon which they disagree with reasons. Experience suggests that this process leads to substantial agreement and thus assists in the process of settlement. 17. Alternatives to a deputy In cases where there is less than a 100% recovery of damages, the very significant costs of the deputy, which are an inescapable consequence of the regime established by the Act, the Code of Practice and the Rules, can have a serious impact on the ability of the award actually recovered to meet the needs of the claimant. The claimant s pressing needs will be for care, therapy, accommodation and equipment and if the award is for less than 100% the claimant s advisers will probably need to invade other heads of claim to make up the shortfall. Thus elements intended to represent loss of earnings or for general damages may need to be brought to bear, and that may have an impact on the ability of the claimant to live at an appropriate standard. 18. Where in addition the full costs of the professional deputy have to be met as well it is easy to see how the award may quickly be eroded. Page 9 of 14

19. Accordingly, it has been suggested that in some cases it may be possible to replace the regime of a deputy with a trust, in particular a Personal Injury Trust, and this proposal resulted in an important decision by HHJ Hazel Marshall QC in the CoP (Re HM (a Child) sub nom SM v HM (By the Official Solicitor as her Litigation Friend) 04.11.11: Lawtel 27/1/2012: [2012] W.T.L.R. 281) 20. Where there is no loss of capacity, but C is vulnerable, the medical evidence will sometimes suggest that to protect C from his own improvidence, or from predators, the award should be secured in a trust. Experience has shown in such cases that the management of such a trust, with a professional trustee is not (in fact) a lot cheaper than the costs incurred by a deputy. Indeed in SM v HM Judge Marshall reaches a similar conclusion (paras 101-106). 21. There are significant limitations to the protection provided by a trust, in particular the claimant (who has capacity) is entitled absolutely to the trust fund and can call for an immediate distribution of the whole fund or any part of it. In the case of a person lacking capacity, the concern is that the trustee is not subject to the same level of oversight and control by the Court as a deputy. 22. In SM v HM the initial decision of DJ Ashton reflected precisely these concerns and he refused the application to allow the funds to be managed under the auspices of a PI Trust. Page 10 of 14

23. In this case proceedings had been brought against an NHS trust and HM was to receive a lump sum, which was significantly less than the level at which her financial needs had been calculated. In order to save some of the costs involved in a deputyship, it was proposed to set up a personal injury trust to administer the damages award, even though the claimant was a protected party. The issue was whether it was ever, and if so in what circumstances, appropriate for the Court of Protection to authorise the creation of a trust of the assets of a person who lacked capacity as the means of administering those assets, rather than appointing a deputy. The proposal was to set up a personal injury trust, (intended to take the form of a bare trust with administrative powers) to administer the damages award for HM, with the trustees being her mother, and a partner of the firm of solicitors who had been acting for HM. The view was recorded that this could save between 1,000 and 2,000 pa as compared with the costs of a deputyship. 24. The judge concluded that despite it being a CoP case, there was nothing to prevent such an order (sub-s.18(1)(h) of the 2005 Act permits the court to authorise the settlement of P s property whether for P s benefit or the benefit of others), but that it would be rare, and she gave extensive guidance as to when it might be appropriate. On the facts of that case she made such an order. 25. It must be stressed that inevitably the decision was inevitably one on its own facts, since any act done or decision made on a protected party s behalf must be done Page 11 of 14

or made in her best interests (s.1(5) of the Act). The test therefore is what is in P s best interests in the individual case. 26. In a very wide ranging judgment the judge investigates a great many considerations (tax, supervision, potential conflicts, administrative efficiency and so on) of which costs savings are but one. In the context of costs savings she said (para 106) Unless, therefore, it can be said with confidence that both the likelihood of saving, and the amount of saving are clear, departing from deputyship is a gamble, and probably will not be justified. However, this is a highly individual consideration, and, if funds are very short, it may be that the relatively large benefit of a relatively small saving, if this can be predicted with sufficient confidence, could provide sufficient justification for using a trust. She summarises her conclusions on how such an application should be presented and proved at paras 137-145 27. In the event the judge decided in favour of the applicant and allowed the trust (albeit not, she said, without some hesitation). It was only because the various factors she considered coalesced in favour of the trust that she did so and it is plain that the fact that the claimant s mother was a competent, forceful, well-educated and responsible person was also a very powerful factor, because it provided Page 12 of 14

a safeguard against what the judge considered to be the insidious disadvantage to P inherent in a settlement, namely the potential for what she called fee drift, ie the uncontrolled escalation of professional fees and other charges. 28. This is, nevertheless, a very useful case where recovery is less than 100% and costs need to be saved but the judge makes clear that it is essential to support the costs argument with clear and compelling evidence, as in many cases there may not be much difference in the costs incurred in managing a trust, and there are many other considerations (including the protection available to the protected party). 29. As an aside it is relevant to note that the judge laid down a specific warning to defendants not to expect to be able to use the decision as a basis for an argument that the costs of a deputy could be saved by using a trust instead (see para 107). 30. The role of the Deputy in the litigation Lastly and briefly, the lawyers conducting the litigation for the claimant not only should ensure that the deputy is included in meetings and conferences, but they will often find that the deputy is able to contribute significant practical assistance. The deputy may be involved (for instance) in some of the more practical aspects of planning for the claimant s accommodation or care regime. But it is important that care is taken not to duplicate the functions Page 13 of 14

of the case manager (for whose time there will be a separate head of claim). Christopher Sharp QC 11 th March 2013 Christopher.sharpqc@stjohnschambers.co.uk St John s Chambers Page 14 of 14