Fixed Costs Extension: MOJ Expand Fixed Costs Regime

warren v dsg

The recent announcement that the final piece in the Jackson reforms (2017) is being dusted off having fallen under the table since the consultation paper “Extending Fixed Recoverable Costs in Civil cases; Implementing Sir Rupert Jackson’s proposals” was published in 2019; cannot have escaped anyone’s notice. 

In case it has, the Government has now finally provided a response to the consultation, with the Lord Chancellor announcing that fixed recoverable costs (FRC regime) are to be extended to all fast track cases (valued up to £25,000) and, via a new regime, to ‘simpler’ cases valued between £25,000 and £100,000. 

Cases will be ranked into complexity bands, with the fast track expanded to include ‘intermediate’ track cases, and judges will be asked to exercise their discretion to ensure that these are properly allocated.

Multi track claims will continue to proceed under standard costs rules, and more information on the fixed costs extension can be found here.

 

The impact of the fixed costs extension on the legal profession

This has understandably caused some outcry amongst the legal profession primarily because the fixed costs adopted by the MoJ were based on just one law firm’s sample of cases, where it acted for the Defendants. Will these changes provide genuine access to justice allowing a party to conduct litigation effectively? 

To quote Sir Rupert Jackson himself: ‘If the costs are too high, people cannot afford lawyers. If the costs are too low, there will not be any lawyers doing the work’.

It is highly likely that law firms will withdraw from providing these services. 

Alternatively, lawyers will only be able to offer legal services in these areas on the basis that they will seek to recover the full extent of their charges from the client; thus, reducing the damages awarded. There is, therefore, a real concern that only a privileged few would be able to afford to pay for their litigation fees without any regard for what can be recovered from the losing party.

Then, there is that other potential can of worms…. the increased possibility of discord between Solicitor and their client adding to the plethora of solicitor-client disputes currently before the Court, which cases themselves lead to significant legal fees between the parties. 

The irony in that scenario being that, as Solicitor client assessments are not subject to allocation to track, those costs can far outweigh the amount in dispute with most lawyers in that market operating on no win -no fee retainer arrangements when representing the former client. Are we likely to see an increased presence in that market as Solicitors fight to survive? 

Neil McKinley, president of the Association of Personal Injury Lawyers (APIL), said the MoJ’s decision ‘misses the point that most personal injury cases really are complex and cannot simply be shoe-horned into a simpler system with which they are just not compatible.

‘Employers’ liability disease claims, for example, can be incredibly complex, as can product liability claims, yet both categories of claim are to be included in this new system. The MoJ has also provided little detail about how this will work, leaving it to “the parties and judges” to work that out. That will take time and, until we get clarity on these matters, injured people will be subjected to a great deal of uncertainty at a time when they are very vulnerable.’

Once the fixed costs regime is widened, there does not appear to be any mechanism for them to be regularly reviewed or updated in line with inflation. Take the guideline hourly rates for example, they were set in 2010 and have not been reviewed or increased until October 2021; 11 years!

The present fixed costs in CPR Part 45 came into force on 31/07/13 and have not been reviewed or revised since then either.

Matthew Maxwell Scott, Executive Director of the Association of Consumer Support Organisations which represents claimant groups said, ‘Setting costs wrongly will have an immediate, material impact on both access to justice and on there being adequate levels of professional support for claimants.’

The timetable to implement these reforms is likely to be relatively swift with the Civil Procedure Rules Committee commissioned with drafting these rules to be implemented ‘over the coming year’.

Whilst the changes require approval from the Civil Procedure Rule Committee. There has been speculation that the extension could be in place by October 2022 or April 2023, but the MoJ has yet to commit to a start date.

 

How can R&R Solutions assist?

If your business has been affected by the fixed costs extension and you wish to discuss your options, please do not hesitate to contact us for a confidential chat.

We offer a positive solution to any law firm by helping them exit any legal market whilst remaining solvent, maintaining cash flow, and ensuring they get the most out of their files.

We will provide you with all the advice and support you need, and we guarantee 100% confidentiality for all clients. If you would like to find out more about our process, feel free to get in touch today via email (david.johnstone@r-rsolutions.co.uk), telephone (0845 056 1258) or contact Sally Dunscombe at sally.dunscombe@r-rsolutions.co.uk or 07774 205 870.