Eighty trusts call in lawyers over board level exits

The combined cost for the 80 organisations was at least £1.46m. The figure could be higher, as some trusts would not or could not reveal the sums involved.

The revelation led to a claim that organisations are increasingly turning to lawyers when chief executives and other board members leave – even when there is no pay-off.

Managers in Partnership chief executive Jon Restell said lawyers were being involved even when only contractual payments were being made. He added that it had become harder for NHS organisations to agree payments which would “oil the wheels” to allow executives to leave.

Such payments now have to be referred to a higher level, potentially requiring Treasury sign-off, resulting in trusts using more caution.

“It means that because organisations are worried about making payments they are using lawyers more than they used to,” Mr Restell said.

HSJ’s investigation found that around a third of trusts said they had incurred legal fees in connection with resignations, removals, suspensions and sackings or disciplinary actions or investigations since April 2006.

Around twice as many organisations said they had not incurred any costs – and a handful refused to say whether they had, on the grounds of protecting individuals’ identities.

The most expensive cases tend to involve employment tribunal or court cases, where costs can run into six figures.

Maidstone and Tunbridge Wells Trust was taken to the appeal court by former chief executive Rose Gibb in a row about an agreed pay-off. The legal costs related to her case came to more than £150,000 but most this was met by the Department of Health, which also had to meet her legal costs.

This case led to trusts being reminded that pay-offs are likely to need approval.

Royal Cornwall Hospitals Trust has run up a legal bill of nearly £380,000 fighting former chief executive John Watkinson through an employment tribunal and then an appeal. However, it was unable to confirm whether it had incurred any other legal costs relating to board departures.

Former United Lincolnshire Hospitals Trust chief executive Gary Walker is taking the trust to an employment tribunal in October, 18 months after he was sacked. The trust has been unable to give HSJ any information about its legal costs.

In some cases, the lawyers may be doing no more than checking compromise agreements or looking at an exit under the recent mutually agreed resignation scheme or early retirement. Their involvement does not mean that an executive is leaving under a cloud. West Midlands Ambulance Service Trust, for example, has had five executives leave since April 2006 – none of whom were suspended, removed or sacked – but it still incurred legal costs of £23,271.

However, Mr Restell said that there seemed to be an inability to have difficult conversations with senior colleagues.

“The culture of performance management by non-executive directors is not particularly effective,” he said. “We have a group of people who would rather pay a lawyer a lot of money to have a conversation they could be having far earlier with senior colleagues.”

But NHS Confederation deputy chief executive David Stout said lawyers’ fees could be money well spent if they avoided costly employment tribunals by ensuring correct processes were followed. He pointed to the issues in handling high level departures which could make it difficult to use in-house human resources and legal expertise.

Milton Keynes Hospital Foundation trust said almost all its costs related to an employment tribunal, after a director was dismissed for gross misconduct.

The tribunal found unfair dismissal but a re-hearing was ordered as an error of law had been made. The second hearing also found unfair dismissal.

Trust HR director Kathy Renacre said: “It is the trust’s duty to defend its interests. The financial decisions made throughout the process were not taken lightly.”

Nottinghamshire Healthcare trust said most of its costs were incurred in 2006-7 when three executives were suspended. The appeals process with two of them were settled on a “mutually agreed cost avoidance basis” and the remaining executive was seconded elsewhere and left the employment of the trust.

Clive Field, finance director for Surrey and Borders Partnership Foundation trust, said: “We do our utmost to keep legal costs to a minimum. The costs incurred during the past five years relate to three cases, however the vast majority of expenditure is associated with one significant and complex case which extended over a two year period.”

Royal Cornwall Hospitals trust pointed out that it Mr Watkinson’s award had been reduced from £1.2m to £885,000 by the employment tribunal.

A spokesman for the Heart of England NHS Foundation Trust said: “The legal fees that are sometimes required are externally sourced as when required. This is in line with Department of Health guidance and offers best value for money.”

Several organisations said they could not separate out legal costs around executive board members from larger legal bills.