Following the judgement of Master Whalan in PLK & Ors, which allows higher Deputy charges to now be considered reasonable Minster Law Associate Solicitor David Sears provides an overview of the judgement and the impact it will have for claimant law firms and their clients.
Many of our most seriously injured clients are assessed as lacking capacity to manage their financial affairs by appropriate medico-legal experts instructed in their claims. This may be because of a serious brain injury, or psychiatric injuries.
In appropriate cases we instruct medico-legal experts to assess the capacity of a client to manage their litigation and their financial affairs by applying the test set out in the Mental Capacity Act 2005. Where a client is assessed as lacking capacity to deal with their litigation (whether as a result of injuries sustained in the accident or due to a pre-existing condition) then the client would be deemed a Protected Party and a Litigation Friend would need to be appointed to manage the litigation and provide instructions on the client’s behalf.
Where a client is assessed as lacking capacity to manage their finances and property, then they require a Deputy to manage their financial affairs. An application would then be made to the Court of Protection for a Deputy to be appointed and they are deemed to be a Protected Beneficiary.
It is sometimes the case that a Protected Beneficiary has some capacity to manage their finances, for example to deal with day to day spending, but not the larger sums of money which may need attending to as a result of a personal injury claim.
A Deputy could be a family member or other suitable person already known to the client. This is most appropriate where sums of money to be managed are relatively small. However, for larger sums, given the need to produce adequate accounts, deal with financial advisors and investment of funds and to manage benefits applications and the like, it is often preferable for a Professional Deputy to be appointed instead.
A Professional Deputy is often a lawyer who specialises in acting as a Deputy. Acting as a Deputy is a complex area of work as it requires an excellent knowledge of the applicable law, of the procedures of the Court of Protection and the knowledge and experience required to work with clients who may have significant difficulties in understanding their finances and who require careful relationship management.
How are Deputy rates calculated?
Given the inherent vulnerability of Protected Beneficiaries the Court of Protection assesses the bills of Deputies to make sure they are reasonable. The Court of Protection when assessing the bills has applied the Guideline Hourly Rates (GHR) applicable to the geographical area that the Deputy practices in. The GHR however were set in 2010. In many areas of law where great specialism is required, the GHR are often departed from and solicitors will increase their hourly rates periodically to reflect the increasing costs they face in running their practice. It is this background that led to Master Whalan of the Senior Court Costs Office hearing the case of PLK & Ors.
A number of submissions were made on behalf of the various Claimants as to why the GHR should be departed from when a Deputy’s bill is being assessed. While Master Whalan had no power to change the GHR the Master considered that without periodic upward review the rates “cannot be applied fairly as an index of reasonable remuneration”. Master Whalan determined that if the hourly rates claimed fell “within approximately 120% of the 2010 GHR, then they should be regarded as being prima facie reasonable”.
Following the decision in PLK Senior Costs Judge Gordon-Slaker has provided additional guidance as to the practical effect of the judgment.
How are Deputy rates recovered from the defendants?
Where our clients require a Deputy and will incur costs for a Deputy as a result of the injuries sustained, we obtain expert evidence from an independent Deputy as to the costs to be incurred for the period our client lacks capacity. The costs to be claimed will include the Professional Deputy’s costs and other costs such as disbursements (e.g. Security bonds or Court fees). The costs are then claimed for our client from the Defendant as part of their Schedule of Loss.
In cases where such evidence has already been obtained it will now be necessary to seek further expert evidence as to the possibility of the Professional Deputy’s costs increasing. It seems likely that most Professional Deputies will seek to increase their hourly rates for this work, particularly given that we instruct highly specialised and well-respected Deputies on behalf of our clients and those Deputies are most likely to be able to justify an increase to their fees in a competitive market place. Schedules of Loss will need to be checked to make sure that the costs claimed are sufficient to meet our clients’ needs.
It is likely that Defendants will seek to claim there should not be any automatic entitlement to the higher rates. So, it will be important for Claimant Solicitors to consider the marketplace for appropriately specialised Professional Deputies and whether any intended increase in fees is reflected in the marketplace. Where a Claimant seeks to claim a loss, they must only show that the loss is reasonably incurred and reasonable in amount rather than that they have chosen the cheapest option available. Given the decision of Master Whalan it will be difficult for Defendants to argue that hourly rates of up to 120% of GHR are unreasonable, particularly where the Court of Protection has assessed previous bills utilising the higher rate and expert evidence is available to support such costs.