Litigation capacity in serious injury claims: When settlements can be reopened

Blog written by Kevin O’Brien, Partner and Charlotte Wright, Senior Associate in our Professional Negligence team

Earlier this year, colleagues in our Professional Negligence team explored the issue of professional negligence in serious injury claims and the circumstances in which settlements can later prove insufficient to meet a claimant’s long-term needs.

An increasingly significant and often overlooked dimension of these cases arises where a claimant lacked capacity to conduct litigation at the time a settlement was reached.

In our experience, these issues most commonly arise in catastrophic injury claims involving brain injuries where cognitive or behavioural difficulties may not be immediately apparent.

In those cases, the issue may not simply be whether the settlement was too low. The question may instead be whether the settlement itself was legally binding.

Under the Mental Capacity Act 2005, a person lacks capacity if, because of an impairment or disturbance of the mind or brain, they are unable to understand, retain, use or weigh relevant information, or communicate a decision.

In litigation, the key question is whether the claimant can understand the proceedings, weigh legal advice and make informed decisions about settlement.

The courts have confirmed in cases including Masterman-Lister v Brutton & Co [2002] EWCA Civ 1889, that capacity must be assessed in relation to the specific proceedings, and specifically in relation to the claim or claims that reasonably should have been brought.

Where a claimant lacks capacity, CPR Part 21 requires safeguards including the appointment of a litigation friend and court approval of any settlement.

The litigation friend conducts proceedings on behalf of the claimant, while the approval process allows the court to consider whether the settlement properly reflects the claimant’s best interests and long-term needs.

If those safeguards are not followed, a claim that appeared to have concluded years earlier may later be reopened.

Why litigation capacity concerns are often missed

In serious injury litigation, pressure can sometimes arise to settle claims before the full extent of a claimant’s injuries and long-term needs are understood.

That may happen where:

• expert evidence remains incomplete;
• cognitive difficulties are underestimated or treated as purely psychological symptoms;
• a claimant appears outwardly functional despite underlying neuropsychological impairment; or
• insufficient consideration is given to long-term care, deputyship or financial management needs.

We recently acted for a claimant who suffered a brain injury following a road traffic collision.

During the original claim, settlement discussions took place before all recommended expert evidence had been obtained. In particular, although neuropsychological assessment had been recommended, no neuropsychology evidence was obtained before settlement advice was given.

The claim settled at an early stage without a proper assessment of the claimant’s litigation capacity or a full understanding of her future care and support requirements.

Concerns later arose when the claimant’s treating doctor questioned whether the settlement was sufficient to fund her future care needs.

We were instructed to investigate what had gone wrong, and identified concerns regarding both the handling of the original claim and the validity of the settlement itself. We were able to challenge the original settlement and pursue a professional negligence claim against the claimant’s former legal advisers. Substantial further damages were ultimately recovered.

Why court approval matters

Where a claimant lacks capacity to conduct litigation, settlements must be approved by the court.

These safeguards are not procedural technicalities. They exist to protect vulnerable claimants, ensure that settlements properly reflect their long-term interests, and provide certainty and finality for all parties involved.

When settlements can be reopened

Where capacity concerns exist and the correct procedures are not followed, an apparently concluded claim may be reopened years after settlement.

We acted in another case involving a claimant who suffered catastrophic brain and physical injuries as a child following a road traffic collision.

Although the original settlement was not necessarily outside the reasonable settlement range at the time, it was reached without court approval despite clear capacity concerns.

No professional deputy was appointed and the settlement funds were paid to family members without the protection of the Court of Protection regime.

Over time, a significant proportion of the damages was dissipated.

The issue only came to light years later when concerns were raised by the claimant’s case worker. Following questions about how the settlement sum was dealt with, we were instructed to investigate any potential claims on behalf of the claimant. The original settlement was successfully challenged and a substantially improved settlement was achieved. A separate professional negligence claim was also pursued in relation to the failure to protect and properly manage the original damages.

Warning signs that capacity concerns may have been missed

In practice, concerns about historic settlements are often first identified by deputies, clinicians, support workers, case managers or family members.

Warning signs may include:

• settlement funds becoming exhausted prematurely;
• care packages being reduced earlier than expected;
• increasing reliance on state support;
• unmanaged or poorly managed damages; or
• concerns that future care and accommodation needs were never fully assessed.

These cases highlight the importance of:

• obtaining complete medical evidence before settlement;
• properly assessing litigation capacity throughout the life of a claim;
• seeking court approval where capacity concerns exist; and
• ensuring that settlement funds are appropriately protected and managed.

Where concerns arise regarding a historic serious injury settlement, specialist legal advice should be sought as early as possible.

Looking beyond under-settlement

Professional negligence claims involving serious injury are often viewed purely through the lens of under-settlement.

Capacity cases involve something more fundamental.

The issue is not simply whether enough compensation was recovered, but whether the settlement process itself complied with the safeguards designed to protect vulnerable claimants.

Where those safeguards are missed, settlements that appeared final may later unravel. In some circumstances, claims may still be pursued many years after settlement where limitation periods were suspended due to lack of capacity.

For claimant solicitors, deputies and those supporting injured people, the message is clear: capacity must be actively considered, properly investigated and kept under review throughout the life of a claim.

Where there is uncertainty, court approval provides protection not only for the claimant, but for all parties involved.